



* V *V 



PROGRESSIVISM— AND AFTER 



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PROGRESSIVISM 
-AND AFTER 



BY 

WILLIAM ENGLISH WALLING 

AUTHOR OF "SOCIALISM AS IT IS." ETC. 



JSeto gorfe 

THE MACMILLAN COMPANY 

1914 






Copyright, 1914 
By THE MACMILLAN COMPANY 

jSet up and electrotyped. Published March, 1914 



MAR 19 1914 



©CI.X36.936 5 



PREFACE 

In writing about the relations between Progressive, 
Labor, and Socialist parties, I believe I have given fully 
as much space to pointing out the very great services 
they are destined to render as in showing their limi- 
tations. But these movements are exceedingly popular. 
The public is accustomed to hear their claims expressed 
with every degree of eloquence, while the only criticism 
that is ordinarily heard is the entirely negative and de- 
structive one of the reactionaries and conservatives, 
who at the bottom are satisfied with things as they are, 
or, at most, are content with a very modest rate of prog- 
ress, and would have wished to kill the new movements 
before they were born. There has been little or nothing 
of that constructive criticism which considers such move- 
ments as natural products of social evolution with cer- 
tain definite functions to fill, acknowledges that they 
have a future neither entirely bad nor entirely good, and 
shows that they also have certain limitations — like every- 
thing else. Since these limitations are so little discussed, 
and since the public is more or less familiar with much 
of what I have to say in praise of these movements, it is 
probable that the spirit of criticism will, at first, impress 
many readers as dominating this book. I have tried 
throughout every chapter to avoid giving any ground for 
such an impression, and believe that if the book neverthe- 
less has this effect on some persons, it will be due to 
previous reading of uncritical wdrks rather than to any 
fault of mine. 



vi PREFACE 

But to make my point of view unmistakable, I shall 
here endeavor to state my political creed in a few para- 
graphs : 

Wherever there is an inevitable conflict between a 
lower and a higher social group, any person who is 
wholly progressive must take his stand with the lower 
group. For the upper group will always use its power 
chiefly (though not exclusively) for its own purposes. 
That is, every ruling social group is an exploiting group 
— as long as there is a lower group to be ruled and ex- 
ploited. 

Every individual who wishes the maximum of social 
progress should therefore view all social questions from 
the standpoint of "the lower half" (which, however, is 
not quite half the population and never will be allowed to 
become half). This "lower half" consists of several ele- 
ments, the chief of which is ordinarily called "unskilled 
labor." 

Accordingly, in every conflict between this "lower 
half" and the next higher social group — which consists 
largely of the "aristocracy of labor" (together with cleri- 
cal labor, the poorer professionals, etc.) — it is the duty 
of the genuine progressive to take his stand against these 
latter classes and their parties (usually called Labor Par- 
ties) and to fight on the side of the laboring masses. 

Similarly, in every conflict of "the aristocracy of labor" 
with the next higher social group, the small capitalists, 
the real progressive must take the side of "the aristoc- 
racy of labor." Thus he must stand with "Labor" par- 
ties as against mere progressive parties, and also, as a 
rule, with trade unions — no matter how small the group 
and interests they represent — as against employers. 

And finally, in every conflict between progressives and 
conservatives, he must stand with the progressives — 
even though they seem to represent nothing whatever but 



PREFACE Vll 

the interest of the small capitalists against the large. 
For, though the interest of non-capitalists be apparently- 
ignored, the majority of the so-called small capitalists 
"live principally by means of their own labor" and are 
thus somewhat more akin to labor than to capital. 

The above is not merely a personal creed, for we find 
that it is more and more being adhered to by a large and 
rapidly growing number of persons. The "unskilled," 
even when organized in revolutionary unions at war with 
the "skilled," vote for the latter's "Labor" Parties. And 
Labor and Socialist Parties, all over the world and with- 
out exception, support the radicals and progressives in 
every important struggle against the conservatives. 
Moreover the number of persons who follow this policy 
will be vastly increased as soon as our political machinery 
allows a full and free expression of opinion. At pres- 
ent the voter who prefers Socialism and progressivism 
to conservatism can only express one of his preferences. 
The best systems of proportional representation (second 
and third choice voting or non-partizan primary elec- 
tions) allow him to express both choices at the same 
election. Without some such system many persons are 
voting for progressive candidates in order to defeat con- 
servatives, who unquestionably would be prepared to 
support the Socialists against the progressives if the 
conservatives were eliminated on the first count or first 
ballot. 

Although this position, developed in my "Socialism as 
It Is," was accurately grasped by the great majority 
of the critics and reviewers, it was also widely misunder- 
stood. Dr. John Graham Brooks, for example (in his 
American Syndicalism, p. ioo), suggests that because I, 
a Socialist, had said that the Progressive Party program 
was "in no degree Socialistic" that this amounted to "a 
flouting of reforms." The insinuation is that Socialists 



Vlll PREFACE 

are all so dogmatic and partizan that they must claim 
that there is no good outside of Socialism, and that for 
a Socialist to say that a program is not Socialistic is 
for him to say that it has little or no value. 

It is true that this has been the position of most par- 
tizan Socialists, especially of the more opportunistic, who 
are forced to endeavor to compensate for their readiness 
to compromise their principles in all really important or 
practical matters by an extreme and unreasoning partizan- 
ship in refusing to give credit to rival or hostile move- 
ments for any really important achievements. But this 
has never been my position. 

"Useful but temporary makeshifts" is the way the 
most influential writer in the American Socialist move- 
ment characterizes the whole progressive reform pro- 
gram. (See Morris Hillquit in Everybody's Maga- 
zine, November, 19 13.) 

"A profound, revolutionary and permanent social ad- 
vance from every standpoint — even that of the wage- 
earners," is what I show the present and impending 
changes to be. And I show further that, while there 
is no hope for Socialism as an outcome of the present 
society, Socialism will be both possible and inevitable as 
an outcome of the new society that is now forming- — in 
spite of all that progressives or Laborites may do to pre- 
vent this outcome. 

Apparently one is supposed either to be exclusively 
devoted to the progressive program as it is being carried 
out by the progressives, or to be wholly opposed to it, or 
to be avoiding the issue. My position, which is that of a 
great many, cannot be put away into any of these three 
pigeon-holes. I consider current reforms as being ex- 
tremely important and valuable, as being wholly progres- 
sive, as in no way impeding the further advance towards 
Socialism, but as an absolutely indispensable prepara- 



PREFACE IX 

tion for it, and as starting out on a road that leads 
finally in the Socialist direction. Although this road 
starts out at a different angle, whether the progressives 
like it or not it must turn that way. But I consider 
Socialist reform as infinitely more important than pro- 
gressive reform, because it alone would lead at the 
present moment directly towards a better distribution 
of income and opportunity. Does this mean that I at- 
tach less value to present reforms than Dr. Brooks does? 
On the contrary we Socialists should, and usually do, 
attach more value to reforms than do the mere re- 
formers. We see their present advantages, but we see 
further that they may be used as a means to reach So- 
cialism. I, for one, am going to avoid further misunder- 
standing. I am unqualifiedly and enthusiastically in 
favor of these measures — as I believe are the overwhelm- 
ing majority of Socialists everywhere — though many 
of them mistakenly expect Socialists to carry them out. 
However, though Socialists are in no position either 
to carry out or to compel or direct the carrying out of 
important reforms, they are certainly among their chief 
originators. The fact that Socialists wish to use re- 
forms for larger purposes, far from crippling their work 
as reformers, makes it more effective than that of others 
who do not care to look beyond, or perhaps even to pass 
beyond, these first steps in progressivism — in view of the 
fact the road promises, before many steps are taken, 
to lead in a direction they do not desire — that is, towards 
Socialism. 

While one must favor the whole progressive program 
whole-heartedly and work for it effectively if one is a 
Socialist, it is of the utmost importance to distinguish 
between progressivism — even in its most advanced form 
— and the first steps in Socialism. For the difference be- 
tween the two movements is one of kind and not merely 



X PREFACE 

of degree. While they may and often do agree both 
as to the ultimate goal and as to immediate practical 
measures, they take diametrically opposite views as 
to a far more important matter, namely, the whole 
field that lies between the ultra-practical (immediate 
measures) and the ultra-ideal (the ultimate goal). As 
to the best that can be put into practical effect this year 
or next, given the present power of the various parties, 
all practical persons, of whatever party, may, and often 
do, agree. And the majority of the opponents of Social- 
ism have complimented its ideal as a possibility or prob- 
ability of the remote future. The real field of political 
conflict lies between these two periods. The important 
question is what part of the ideal is within the range of 
present practical activity? Rather than "final" or "ulti- 
mate" goals, we need goals that may be achieved in our 
time, or at least largely achieved by us and finished by 
our children. Ultimate or final goals are so unrelated to 
the present as invariably to receive the most absurdly 
contradictory applications, often serving admirably the 
purposes of reaction. 

We need to know, on the other hand, not what we can 
do with this year merely, but what we can do with our 
lives. We differ practically, not so much on immediate 
programs of action as on intermediate programs. Imme- 
diate programs bring no new constructive forces into pol- 
itics, accomplish no great changes, since the promise of 
great changes always lies largely in the future, but merely 
recognize conditions as they are and make the most of 
them. Only that ideal which consists wholly in a prac- 
tical program and has no other formulation, only that 
practical program which at every point embodies this 
practical ideal and no other, can give us the principles 
through which the maximum of progress is to be secured. 

A fundamental criticism of my method must also be 



PREFACE XI 

noted. It is well stated by Dr. John C. Kennedy (The 
American Journal of Sociology, December, 1913) : 

"Walling constantly sets 'State Socialism' and Col- 
lectivism over against true Socialism. Aside from the 
fact that unquestionably most Socialists are Collectivists, 
Walling seems to be extremely unpragmatic in his at- 
tempt to draw a sharp line between the capitalist society, 
the State Socialist Society, and the real Socialist society. 
Unquestionably much of what he designates as State So- 
cialism is simply the beginnings of the Socialist society 
into which we are rapidly evolving." 

My answer is that no evolutionary process can be de- 
scribed except by defining stages of growth and by dis- 
criminating between them. And when these stages are 
not yet generally understood or accepted the discrimina- 
tion must be made as definite as possible. This does not 
mean that the writer recognizes no transitional stages or 
that he believes that the opposition between one phase 
and another is always sharp or that there is always any 
opposition at all. My meaning is only that the actually 
existing cleavage between the State Capitalist, State So- 
cialist, and Socialist policies is the one great political fact 
that is most in need of recognition to-day. Indeed it is 
equally essential to my argument that one stage is evolv- 
ing into the other. "The beginnings of the Socialist So- 
ciety" are to be found not only in State Socialism and 
State Capitalism but also in the present society, in feudal- 
ism, and even in slave-societies. This half of the truth 
must never be lost sight of, but it is already generally 
recognized, and is even too much dwelt upon, and so there 
is far less need of emphasizing it than there is of dwel- 
ling upon the other half of the truth — that these are all 
profoundly different stages of social evolution. 

There is another personal statement that cannot be dis- 



Xll PREFACE 

pensed with. I touched upon several of the topics of the 
present book in my "Socialism as It Is," which was writ- 
ten for the most part nearly three years before the appear- 
ance of the present volume. I do not pretend to have 
learned nothing new during this period. On the contrary 
the last three years, as I predicted, have been years of 
rapid and even critical political change in nearly all of the 
leading countries of the world. Both Socialism and Pro- 
gressivism have been largely revolutionized. As a conse- 
quence some of the tendencies I then featured have been 
immensely strengthened and have continued in the direc- 
tion I indicated — for example, State Socialism and Syndi- 
calism. Others, however, have been swamped by counter- 
tendencies. I described the growing strength of the 
revolutionary wing of the Socialist Party in Germany 
and other countries, and expected this growth to con- 
tinue. But the other wing, the reformists, have now 
swept everything before them, and seem in secure con- 
trol, not only in Germany, but in every other country 
except Italy, where there are now two flourishing So- 
cialist parties, representing both tendencies. The change, 
however, is closely connected with another change in the 
opposite direction, the rapid increase of revolutionary 
Socialism in the labor unions. In several countries, such 
as France, the revolutionists are more numerous than 
ever, but have left the Socialist Party to the reformists, 
while they give themselves entirely over to labor union 
action. In other countries, like Germany and Belgium, 
they are also giving themselves up to revolutionary mass 
movements, though with a political object, e. g., to the 
general strike for universal and equal suffrage. Revolu- 
tionary or radical Socialism continues to advance, but not 
in purely political movements, as I had expected. 

Like "Socialism as It Is," the present volume is, I 
believe, thoroughly international in scope. In that work 



PREFACE Xlll 

I gave only a minor portion of my space to the United 
States. At present I am mainly concerned with this 
country because the new movements are now developing 
more rapidly here. However, I have made frequent 
references to Great Britain, Germany and Australasia, 
and have held the international standpoint in mind 
throughout. Of course the names used for these new 
movements differ from country to country. It will be 
noticed, for example, that the "progressives" of Amer- 
ica hold almost identical views with the Radicals of 
Great Britain. 

With the exception of two sections of the Appendix, 
the book consists almost wholly of new material. Parts 
of my analysis of President Wilson's position in the 
earlier chapters are taken from articles published in The 
New Review, and my analyses of the article series of 
Hillquit and of Mr. and Mrs. Webb are from The In- 
tercollegiate Socialist. Appendix F — "The American 
Socialist Party and the Race Problem" — is taken largely 
from an article published in The Independent, and Ap- 
pendix D, on French Syndicalism, from The New Re- 
view. 

William English Walling, 

Cedarhurst, Long Island. 



INTRODUCTION 
i. Subject 

For a truly scientific perspective of any movement we 
must try to place ourselves in advance of it. The child 
cannot understand the man. The man may understand 
the child. 

The mere wish to take an advanced position and from 
there to look back on our own time is, of course, not suffi- 
cient. No individual can hope to take such a position 
successfully except as one of a very large group of per- 
sons who habitually and systematically adopt this stand- 
point, who aid one another in the effort to apply it prac- 
tically, and are forced by their interests, their daily lives 
and their whole outlook to center their attention chiefly 
on the future. 

Fortunately there is such a social group, numbering 
millions of people and distributed throughout all modern 
countries. The various schools of Socialists of the world 
are of many utterly different opinions on every funda- 
mental question but one. All who are really Socialists 
concentrate a part of their attention on the stage of so- 
ciety that is to follow the progressive or "State Socialist'' 
period into which all the more advanced countries— the 
United States, Australia, Great Britain, France, Italy, 
and Germany — are now entering. All Socialists without 
exception try to view this new movement — whatever we 
call it, Progressivism, State Socialism, State Capitalism, 
or Laborism — from the other side. And this, as I shall 
show, is the only scientific and practical method. 

XV 



XVI INTRODUCTION 

Progress will not cease with the Progressive move- 
ment. Ex-Senator Beveridge has recently quoted with 
approval Jefferson's remark that no party ought to last 
more than thirty years. As things move on so much 
more rapidly in these days we may agree with him, with 
the amendment that now even thirty years is probably too 
long. Within half that period, no doubt, the pres- 
ent world-wide State Socialist and State Capitalist move- 
ments will have transformed our present society and 
completed their beneficent and revolutionary task. To 
understand this movement then, and to judge it fairly, 
we have to put ourselves forward only for this com- 
paratively brief period — and men have often succeeded 
admirably in looking much farther ahead. 

No leading American progressive (Democratic, Re- 
publican, or of the Progressive Party), nor any leading 
German, English, or Australian of this political faith, 
would contend for a moment that social institutions, polit- 
ical or economic, will cease to evolve when their partic- 
ular program will have been put into effect. But as ultra- 
practical men and women they do not devote any of the 
time of their movement to these underlying and far- 
reaching questions. As party members, indeed, they act 
as if such questions did not exist. Thus they not only 
fail to grapple with or to understand the problems of the 
next generation, which it is the business of all of us, 
even as parents, to know something about, but they fail 
to see deeply into our own times for the lack of suffi- 
cient perspective. 

Progressives, therefore, do not understand and cannot 
explain the progressive movement. They do not realize 
that the business of the coming generation belongs to 
us almost as much as our own business does, and that the 
interests of our children must overshadow our own in- 
terests in many of the most fundamental issues of so- 



INTRODUCTION XV11 

cial politics. They do not realize that the next two or 
three decades are really a part of the present and that 
their program scarcely provides measures and policies 
for half that period. 

Progressives may contend that their program will 
grow with the times. But here is where we see the wis- 
dom of Jefferson's principle (accepted by the Chair- 
man of the Progressive Party Convention). A party, 
like an individual, has a period of growth — but only 
until it reaches full maturity. I concede, in the present 
volume, that the American and British progressive move- 
ments, which are now so rapidly taking on new measures 
and policies, have still a period of growth before them — • 
and I point out that, according to the precedents of other 
countries, they must soon come to take a very radical 
position — more radical than some of their leaders are 
yet willing to admit. But there are also signs, in several 
countries, of the approaching maturity of this movement. 
And I believe I can convince the reader that it will prob- 
ably be only a few years until it will have reached its 
climax, will have fulfilled its functions and will begin 
gradually to decline. Progress will continue but not 
through the progressive movement. 

It has been demonstrated that every science is given 
its character as soon as its limits are defined, but not 
before. It is the same with a social movement. When 
we get some idea of the movements that accompany, pre- 
cede, and follow it, then and then only do we understand 
the movement itself. Progressives have failed to note 
that to understand progressivism it is necessary to under- 
stand its limitations. 

And similarly, if we wish to understand the limitations 
of the movement that seems destined to follow progres- 
sivism, we must have a well-defined idea of that move- 
ment also; and for this last-mentioned purpose, finally, 



XV111 INTRODUCTION 

we should have some general outline of the movement 
that seems destined to succeed this last. 

That we can form a well-defined idea of the movements 
which, in the minds of most unprejudiced observers, are 
bound to succeed progressivism, namely such Labor 
Parties as those of Australia and Great Britain, and such 
conservative Socialist Parties as that of Germany, can 
scarcely be questioned. These parties have been a real 
political force now for a decade or more, and it will 
surely not take another decade before they are dominat- 
ing factors. Their programs have not only been worked 
out, through many years of discussion and study among 
millions of men, but they have been tried in the fires of 
political combat, and in Australia, to some slight degree 
at least, in administration. 

But if progressivism (which I shall henceforth call 
by the more accurate name of State Capitalism) has not 
yet reached maturity, and its destined successor, Labor- 
ism or State Socialism, is only half-grown, by what 
claim of science and common sense can we hope to trace, 
even in outline, the still more radical policy and the still 
more democratic society that are to follow them ? Well, 
if State Capitalism is practically full grown, and State 
Socialism is well on the road to maturity, the succeeding 
movement is at least already born and, as an infant, is 
thriving and growing rapidly in our midst. The New 
Unionism, Syndicalism, or Industrial Socialism, what- 
ever we may call it, has certainly reached a point, in sev- 
eral countries, so that it requires no prophet's vision to 
tell us what its tendency is and what kind of society, 
in a general way, it makes for. 

These three movements, State Capitalism, State Social- 
ism and Socialism, it seems to me, absorb between them 
the practical and scientific interest of all forward-looking 
persons. Between them they rule the advanced thought 



INTRODUCTION XIX 

of the present, as they are destined to rule the society of 
the near future. For, with the constantly accelerated 
progress of our time, we are always moving faster than 
even the most radical had dared to predict. And just 
as progressivism and Laborism will almost certainly 
have made their great and inspiring contributions to hu- 
man progress within the next quarter century — contribu- 
tions, the benefits of which will last indefinitely — so In- 
dustrial Democracy may at least have been inaugurated 
by the end of this period. 



2. Method 

The modern way to discuss anything is to study it in its 
historical perspective, that is, as a growth, divided into 
stages that develop one out of the other. This evo- 
lutionary method is undoubtedly the best. But unfortu- 
nately it lends itself more easily to the past than to the 
future, more often to history than to genuine science. 
Comte pointed out that we can only be said really to see — 
or understand — when we can foresee. And, according to 
one of the best-known philosophers of science, Ostwald, 
the only criterion by which true science can be distin- 
guished from pseudo-science, is that the former is capable 
of practical prophecy, and, when it is applied actually, 
determines the future. 

If we still find leading scientists, like Lloyd Morgan, 
saying that the outlook of science is essentially retrospec- 
tive, this is because such scientists are concerned, even 
in a study like biology, rather with the history or the 
evolution of the past than with real science, the science 
that brings things to pass. The older retrospective 
science, if it was science, was the product of an age when 
men were lost in admiration of the progress that was al- 



XX INTRODUCTION 

ready taking place in nature and in society. If science 
was applied at all for the purpose of accomplishing prac- 
tical results, and of shaping the future, this was done 
by individuals and not by society, and when science was 
applied on a large scale, it was applied to chemical ele- 
ments, physical forces, and lower forms of life, and not 
to man. Sociology had been born, but was still a mere 
chronicler, an onlooker — not functional or scientific in 
the deeper sense. And even biology — which tyrannized 
over the whole field of science, and, at the hands of most 
of its devotees, was merely a descriptive history, dealing 
it is true with the "laws" as well as the facts of past evo- 
lution, and attempting to extend these "laws" to the 
future concerns of man — invariably took as its point of 
departure what had been rather than what, in view of the 
growing mastery of man over nature, was to be. And 
in this effort to govern man rather than to serve him 
biology was encouraged by the society of the time. 
Among all the sciences and philosophies which were com- 
peting for that public attention and financial support 
which are the life blood of all alike, this historical biology, 
with its "Oh so slow !" and at the same time fated "evo- 
lution," and its "survival of the fittest," was best fitted to 
the social ideals and social structure of the time. The 
ruling class was, on the whole, the fit. It had attained 
its position by a "law" of nature. Now that it was there 
it would require millenniums to make even the compara- 
tively small change necessary to replace it. 

But now, every day, science is becoming more con- 
sciously pragmatic, more consciously concerned with the 
service of man. Applied science, as Ostwald says, is 
now recognized as the mother of the sciences. This new 
science and philosophy alone satisfy the demands of the 
age, and are beginning to secure the bulk of that intel- 
lectual and financial support on which even science and 



INTRODUCTION XXI 

philosophy depend. For the present society means no 
longer to leave science either to rely on the approval 
of wealthy philanthropists, who approve of it in pro- 
portion as it teaches conservative "laws," or to depend on 
what it can do that is of immediate commercial value. 
Science is being rapidly endowed, absorbed, and directed 
by government and is being applied more and more ex- 
clusively to work of a practical nature and of the highest 
value, though it gives no immediate profits. And this is 
the science which now has the unqualified support and 
respect of the most able and advanced of the scientists of 
the time. 

The new science then is prospective, not retrospective. 
But if it wishes to use the essential method of evolution, 
how is it to proceed — since evolution, dealing with the de- 
velopment of actual processes, tends to deal exclusively 
with the past? We may answer, briefly, as follows: 
All genuine practical science begins with an hypothesis 
and a plan for work. In the evolutionary method our 
hypothesis and plan should divide the subject into stages 
growing out of one another — developments which we be- 
lieve will actually take place, as they are at once the 
most practicable and the most desirable from the point 
of view of mankind. 

Science looks to the future, not because we are more 
concerned with the future than with the present, but be- 
cause that is the only way by which we can understand 
the present. Insight presupposes foresight. The fore- 
casts upon which all true science rests are merely working 
hypotheses which give us more or less scientific plans for 
present action. Many of these hypotheses will fail, but 
others will stand the test of experience — until their func- 
tion will have been fulfilled. 

We are not concerned then with projecting the past 
into the future, as the older, passive evolutionists did — 



XX11 INTRODUCTION 

when they were called upon for practical and constructive 
work. Not only do we mistrust the lessons of this past, 
but we are concerned with the future in a way en- 
tirely different from theirs. We are neither looking 
from the past into the present, nor from the present into 
the future, but from the future into the present (and, 
chiefly perhaps as a mere exercise of the same faculty, 
from the present into the past). We are evolutionists, 
but we have reversed the very direction of evolutionary 
thought. Much of the older science will, no doubt, sur- 
vive, and will be utilized, but only as it can be made 
to harmonize with the new. We shall apply the old 
method only in proportion as we find facts or laws of 
the past which seem likely to survive in the activities 
of the men of the future. 

In social science we are not in the least concerned, 
then, with mere historical analogies, or with "laws" that 
project or extend the past into the future, but are oc- 
cupied wholly with projecting on the present a series of 
scientific hypotheses based upon what seem to be the 
probable future stages of social evolution. Pretending 
to no dogmatic validity, and leaving the field open to 
other hypotheses, to be similarly tested by later events, 
the only justification of this method is its results. And 
if one who has tried it can point to a balance of successful 
forecasts — as many persons can now do — he can claim the 
attention and, in proportion to his success, the confidence 
of the public. 

An excellent illustration of the successful use of this 
method may be seen in James Bryce's carefully drawn 
and dated forecasts concerning the United States, made 
in 1884, in the concluding chapters of his American 
Commonwealth. Bryce is a Darwinian rather than a 
pragmatist and it is perhaps for this reason that he did 
not make a bolder use of the scientific imagination. For 



INTRODUCTION XX111 

if his forecasts had been broader they would, no doubt, 
have been even more successful, and his treatment of 
his own times would have been correspondingly more 
practical and scientific. 

Bryce's main forecast or hypothesis, which is similar 
to that of many other statesmen, beginning with Ben- 
jamin Franklin, was that, within fifty years from the 
time he wrote (1884), "the chronic evils and problems 
of old societies and crowded countries, such as we see 
them in Europe, will have re-appeared on this new soil." 
Though the probability of this change was taken as a 
matter of course by so many persons, it has been either 
denied or practically ignored by the great majority of 
Americans, including our leading statesmen, from the 
time of Jefferson and Lincoln to the present. 

But Bryce went further into detail. The basic Ameri- 
can conditions, the underlying differences between 
America and Europe, he said, would begin rapidly to 
disappear within half a century. These were, (1) "the 
absence of class distinctions and class hatred," (2) "the 
diffusion of wealth among a vast number of small pro- 
prietors all interested in the defense of property," and 
(3) "the exemption from chronic pauperism and eco- 
nomic distress." He showed that all these conditions 
were temporary, depending chiefly upon an empire of 
free or cheap land in the West. As this land became all 
cultivated, and also as large corporations became more 
numerous and powerful, all three of these conditions, he 
predicted, would disappear. The cost of living would 
rise and real wages would be lowered ; even small farms 
would require a considerable capital, business and other 
opportunities would become relatively less, while, with 
the decrease of opportunities to rise socially, definitely 
marked social classes would appear. This process would 
begin before the lapse of thirty years (19 14) and it 



XXIV INTRODUCTION 

would be far advanced before forty or fifty years (1924- 

1934). 

Not only are these predictions justified up to the pres- 
ent, but they seem almost certain of further justifica- 
tion. In many others of his points (in nearly all) 
Bryce has already proved to be right, and we can only 
regret, as I have said, that he did not have more confi- 
dence in this basic part of his work. On the whole his 
hypotheses were too conservative. It would have been 
better, perhaps, if he had taken a shorter period, 25 or 
30 years, and had worked out his ideas somewhat more 
fully — though detail, of course, is not permissible. Such 
a shorter period, a generation, for example, is both the 
chief practical concern of those now in early maturity — 
for at their peril they must understand in a general way 
the years in which their chief activities will lie — and is 
the proper and practical concern of us all in providing 
for the next generation. As individuals we have always 
looked after the next generation up to the beginning of 
their careers and marriages. To do this we either act 
on our conception of what society and life and people 
are going to be like, or we act on no idea at all. And 
now that society as a whole is beginning more and more 
to provide for the next generation as a whole, principles 
even more definitely scientific and practical are called 
for. The period is not a long one to forecast, for most 
railroads and canals and most government investments 
are expected fully to pay only within a quarter or even 
half a century and are based upon calculations of future 
conditions dated that far ahead. And, finally, the con- 
scious effort to deal with the whole of our generation in- 
stead of the present year or two is really not to go into 
the future at all. Logically the present is only an infini- 
tesimal moment. We habitually think and act, however, 
as though it covered a year or two at least, if not a decade 



INTRODUCTION XXV 

or two. Nearly all historians and most publicists would 
refer to the period 1890- 19 14, for example, as "the pres- 
ent." We have an equal right and duty to regard the 
period 19 14- 1940 as all belonging to the present time. 

Yet, however short we try to make the period for 
which we look ahead, our hypotheses will have to be as 
broad as possible. For the changes in the next quarter 
century will surely be nothing less than revolutionary. 
Progress is cumulative, and advance in any direction 
furthers advance in every other direction, and so the 
rate of progress is constantly accelerated. It has been 
said that we have advanced more in the last century than 
in the preceding twenty centuries. And we may confi- 
dently expect more progress in the next twenty-five years 
than we have had in the last fifty. If, then, as Dr. 
Charles W. Eliot says, "the whole world has been remade 
in fifty years," we can be certain that the world will be 
remade again in the next quarter century. The greatest 
revolution in the history of the human race, greater I 
believe than all previous revolutions put together, was 
the world-wide and effective application of steam trans- 
portation and communication in the last half century. 
The signs that point to a far greater revolution in the 
next generation are enough to convince the least scientific 
and imaginative. 



3. The Practical Ideal 

The fact that the rate of progress is constantly being 
accelerated is acknowledged by most thoughtful and 
honest men — provided they are not blinded by some com- 
mercial interest or personal privilege. The great differ- 
ences of opinion to-day are not as to the nature of prog- 
ress or its direction, but as to its rate. When will the 



XXVI INTRODUCTION 

changes most of us expect begin? If next year we 
must give them immediate attention, if in our genera- 
tion we cannot afford to neglect them, if in the next we 
can leave them largely to our children. And according 
as we put an expected social change in one or the other 
of these positions we may reach the most diametrically 
opposed conclusions with regard to it. 

We may all agree about that which is of no immediate 
importance. YVe may have the same ultimate goal. And 
yet we may differ completely on all practical questions 
of the present and of the incoming generations. 

Many Socialists, for example, say that the essential 
thing that distinguishes the Socialist party is its goal and 
not its program of practical demands, of which, they 
admit, scarcely one is peculiar to the Socialists. 1 If this 
be so, then as a matter of sheer fact there are no Social- 
ist parties anywhere, but merely organizations similar 
to other progressive and Labor parties, with the entirely 
incidental and, from a practical standpoint, negligible 
difference, that they cultivate another ideal. For condi- 
tions, which create ideals, or at least decide their survival 
or non-survival, are constantly changing and we cannot, 
therefore, gauge the real nature of a movement by its 
ideals, but only by its practical aims and its actions. New 
conditions will lead some persons (and movements) to 
abandon their so-called goal, will bring others to endorse 
the same goal, and may even force certain groups, which 
now merely profess the goal — as an ultimate ideal — to 
make it also a practical aim. Whatever happens in this 
matter depends on changing conditions, and in the mean- 
while the nature of the "ultimate goal" is of utterly sub- 
ordinate interest. 

Many progressives in America and other countries 
profess to believe, or do believe, that they are guided 
by some such ultimate goal as "industrial democracy," 



INTRODUCTION' XXV11 

or "economic democracy," or by the general interests of 
"the State," "society," "humanity" or "the race." The 
last named cease almost to be concrete social goals and 
are rather mere ethical ideals, like that vague "altruism" 
which is also professed by many American progressives, 
though it is now less fashionable than these newer and 
more scientific phrases. 

Roosevelt offers us a good illustration of the present 
transition in the form of the statement of ideals in his 
recent Century article, where he weaves in "altruism" 
with a modified Socialism and individualism. "The goal 
is not Socialism," he says, "but so much of Socialism 
as will best permit the building thereon of a sanely altru- 
istic individualism." 

In so far as such distant goals are clear and concrete 
— which "altruism" certainly is not — nearly everybody 
accepts them to-day, and the only question is, By what 
road are they to be reached and how soon? We want 
to know, not so much what the social ideals or ultimate 
aims are, as what they are doing for the groups that pro- 
fess them, and what these groups are actually doing for 
their ultimate aims. What we want to know is, first, the 
principle that is actually guiding the practical action of 
those who profess such goals, and, second, the motive 
that led to the adoption of this acting principle, and, 
finally, the general social conditions that determine that 
motive. We are trying not only to look as far in front 
of the act as possible, but also to see as far as we can 
behind it — without going into the past 

And when we look for the motive behind the political 
act and its immediate guiding principle we find with Wells 
(in his New Machiavelli) that it is prompted "by interests 
and habits, not ideas." "Every party," Wells continues, 
"stands essentially for the interests and mental usages of 
some definite class or group of classes in the existing com- 



XXV1U INTRODUCTION 

munity. . . . No class will abolish itself, materially 
alter its way of life, or drastically reconstruct itself, 
albeit no class is indisposed to co-operate in the unlimited 
socialization of any other class. In that capacity of ag- 
gression upon the other classes lies the essential driving 
force of modern affairs." x 

It is a man's social group, his inherited wealth or 
poverty, his educational privileges, his income, his ex- 
pectations and opportunities that finally determine his 
action, unless in rare exceptions, and not ultimate social 
goals and ideals. 

We want to look just so far into the future then as 
will have a decided practical effect on our present actions. 
And what we want to know from the future is not so 
much the direction in which we are going, since most of 
tis will agree about this, as the distance we ourselves or 
our children may expect to travel on the road. 

If we believe that we are destined to go very slowly 
and that it will take a century or two to reach social 
democracy, for example, it makes no difference whatever 
whether we regard social democracy as an ideal or as a 
condition of society we abhor. It makes no difference 
whether we try to defend Socialism with such an argu- 
ment as that of the Metropolitan Magazine : "We would 
have it clearly understood that we have no foolish illu- 
sions about human nature and the possibilities of perfect 
equality. We cannot abolish capital by a stroke of the 
pen; nor can we accomplish in fifty years, nor yet in a 
hundred, half of the Socialist program. The world does 
not advance in that way." — or attack Socialism with pre- 
cisely the same argument, saying to the Socialists, "You 
cannot accomplish in fifty years, or yet in a hundred, half 
of the Socialist program." 

For every practical purpose the two views are identical. 
Indeed, since the tendency towards Socialism has been 



INTRODUCTION XXIX 

admitted by many of its most bitter enemies (such as 
Herbert Spencer and John Morley), by far the most 
effective way of combating it is to postpone its probable 
date a century or two. And, if this is done under the 
guise of a defense, it is all the more effective. 



4. The Present Law of Progress 

I shall then state at the outset that hypothesis, or 
forecast, of the progress of the present generation (or 
quarter century) which seems most in accord with the 
facts. An hypothesis should never be presented as "the 
conclusion" of a book, for it is always as much the prin- 
ciple upon which the facts recited are chosen from the 
multitude of facts known, but not mentioned, as it is a 
conclusion from all the facts. 

I have divided society, first, into its two most impor- 
tant groups, capitalists and non-capitalists. But I have 
not stopped with this division. Without wishing to carry 
the process of sub-division so far as to introduce con- 
fusion into the argument, I have divided each of these 
two groups into two again, the four groups then being: 
the large capitalists and the small capitalists; the priv- 
ileged non-capitalists and the non-privileged. The divi- 
sion into the two classes is the familiar one of the Social- 
ists, the division into four groups is also recognized by 
them at times, but is given an entirely subordinate im- 
portance, when it is not suppressed entirely. In the So- 
cialist reckoning the small capitalists are usually sup- 
posed to be overpowered by the large whenever there 
is a serious conflict, though the two are portrayed as 
being in entire accord on all fundamental matters, which 
are held to affect all capitalists alike. The privileged 
"aristocracy of manual labor" and the closely related 



XXX INTRODUCTION 

"educated proletariat" are also recognized, but are sup- 
posed, in all fundamental matters, to act more and more 
with the other non-capitalists, that is with the non-privi- 
leged manual wage-earners and brain-workers. 

But I hold that each of these four groups dominates, 
or will dominate, a period in the evolution of society. 
The large capitalists still control economic affairs in all 
modern countries, although the political power of the 
small capitalists is on the very point of overthrowing 
them, not only in Australia and the United States, but 
also in Great Britain and other countries. Within a very 
few years the small capitalists may be in complete control. 
But their control cannot be lasting. 

For the process of depriving the upper classes of power, 
one after the other, has already begun and there is no 
reason to suppose it will stop short of genuine social- 
democracy. For example, take the speech of the Chan- 
cellor of Great Britain, in opening the Government's cam- 
paign against landlordism 2 : 

"Speaking of the powers of the landlord, the Chan- 
cellor of the Exchequer said: 

" 'The authority of the Sovereign is not comparable 
to that of the landlord over his subjects. He could make 
and maintain a wilderness, and he has legal authority to 
do more than even a foreign enemy could impose on the 
country after a conquest. In Ireland millions have been 
driven away from the land by legal process.' 

"The Chancellor disclaimed any desire to attack land- 
lords as a class, but he said that human beings of class 
could not be trusted with such sweeping power without 
abuse, oppression and injustice arising, and it was neces- 
sary to deprive landlords of the power of repeating what 
had happened in Ireland." 

Lloyd George says he is not attacking any class. But 
he is attacking the power of a class and seeking to de- 
prive it of that power — which surely is attacking it, both 



INTRODUCTION XXXI 

from the point of view of the class itself and from the 
point of view of most of those who want to deprive it 
of power. He is attacking the class as a whole, though 
he is not attacking the whole class — that is, he is not 
including every member of the class in his attack. 

Now the power of the large capitalist over his em- 
ployees, Lloyd George would probably admit, is surely 
no less than that of the landlord over his tenants. And 
employees unanimously testify that the small employer's 
power is even worse than that of the large — a condition 
that will scarcely be remedied when we shall have a small 
employers' government and when this government shall 
employ a large part of the nation's workers, according to 
the Lloyd George program. 

There are signs that the sovereignty of the small capi- 
talists will not last many years, for reasons I shall men- 
tion in a moment. Next the non-capitalists, but not all 
non-capitalists, will come to power. For one may pos- 
sess privileges without possessing capital, and the priv- 
ileged non-capitalists will first hold the balance of power 
between the small capitalists and the non-privileged 
masses. How long this rule is likely to last we can 
hardly even estimate at this distance of perhaps a quarter 
century. It may last some time, for it will be solidly 
based on the interests of a majority of the population. 
And, finally, new means are already developing by which 
the minority may make itself recognized and, aided by 
the superior advantages of the society just mentioned, 
may be able at last to bring about an industrial democ- 
racy. 

I am concerned with the revolutions and programs 
of the three movements that represent these three groups, 
to which I shall henceforth refer — for the purposes of 
abbreviation — as the small capitalists, the aristocracy of 
labor, and the laboring masses. 



XXX11 INTRODUCTION 

I regard Socialism as the probable outcome of the 
progress of the next quarter century. But I differ com- 
pletely with the leading official spokesmen of Socialism 
as to its probable means of attainment, for I contend that 
two social stages must intervene. Far from looking 
forward to intervening stages of radical and even revo- 
lutionary social advance, between us and Socialism, 
not one of them, to my knowledge, recognizes any 
intervening revolutionary changes at all. The present 
social order, under the domination of large capital, is 
expected to continue until Socialism arrives, or if any 
revolutionary change takes place, it is to develop almost 
immediately into a Socialist revolution. Marx held to 
the view that as soon as industry became highly organ- 
ized and monopolies developed, the small capitalists 
would be forced to act with the laboring masses to 
socialize industry and introduce Socialism. But already 
at least one stage, that of private monopolies, has in- 
tervened. 

Two of the three stages of social struggle that I shall 
examine are already recognized, but only the first stage, 
the struggle against the large capitalists, is recognized by 
non-Socialist progressives, and only the second, the strug- 
gle against the domination of society by the small cap- 
italists, is recognized by the Socialists. That there could 
be a third stage of social struggle due to a fundamental 
and lasting division within the ranks of labor itself, and 
that the masses of wage-earners would have to struggle 
against the privileged wage-earners even after capitalism 
is abolished, seems scarcely to have entered most Social- 
ists' minds. 

The most fundamental of the conscious doctrines of 
Socialism, the Materialist Interpretation of History and 
the Class Struggle have been freely criticized and inter- 
preted by the Socialists themselves. But underlying 



INTRODUCTION XXX111 

these, and far more deeply rooted, is the great uncon- 
scious dogma of the Solidarity of Labor. 

The real fruits of a victory of the labor organizations, 
according to Marx, lie not in immediate results, but in 
"the ever-expanding union of the workers," and he 
plainly meant all the wage-earning class. Marx clearly 
recognized the existence of an "aristocracy of labor," but 
he expected it gradually to become united with the rest 
of the working-class. On the contrary we find that 
those workingmen who are satisfied or who expect favors 
from the ruling class, like our railway trainmen, are be- 
coming more and more separated from the masses, and 
we can be certain that the conflict between the two groups 
will become more and more acute as the "aristocracy of 
labor," taking advantage of its superior strategic position 
in politics (as it occupies the center of the social scale), 
gradually becomes a part of the ruling class. We shall 
then have neither the "solidarity of labor" nor any 
movement in that direction even, at least not before we 
have the solidarity of all classes, or a tendency in this 
last-named direction. 

Socialists will sooner or later be forced to decide 
whether they are going to aim at the solidarity of labor 
or at the solidarity of the exploited. As Liebknecht long 
ago pointed out, the important question to Socialists is 
really whether a man is a Socialist and not whether he is 
a workingman. But, unfortunately, the Socialists have 
had a loose way of referring to the exploited class — 
which is the rock upon which Socialism is to be built — 
as the "working-class" or "labor." Nor is this an acci- 
dent, for the manual wage-earners have unquestionably 
occupied a privileged place both in the Socialist theory 
and in the Socialist movement. Liebknecht also uses the 
expression, working-class, but then he defines it very 
broadly, as consisting of "every one who does not live on 



XXXIV INTRODUCTION 

the labor of another" and again as being composed of 
"all those who live exclusively or principally by means of 
their own labor, and who do not grow rich from the 
work of others." 

By "the solidarity of labor" then one Socialist means 
one thing, while another means another. Liebknecht 
meant "the solidarity of the exploited" and included 
very large groups besides wage-earners. It is now in- 
creasingly evident also that a very large group of wage- 
earners will have to be excluded. For skilled workers, 
and many groups of government employees and public 
service employees are becoming every year more and 
more separated from the mass of wage-earners, and more 
and more closely affiliated with the progressive capital- 
istic movement. 

Yet, whatever their errors, the Socialists have given 
us not only an ultimate goal that is probably now ac- 
cepted by the majority of the people, as well as a begin- 
ning of a sound understanding of the relations between 
the various parts of society, but they have laid a sound 
foundation for a popular understanding of the law of 
progress in present society, or the process by which con- 
trol passes from one to another group. This is well ex- 
pressed by Bebel in his "Woman" : "The ruling class 
can increase its power and its possessions only by letting 
a part of its achievements fall to the share of the class 
that it oppresses and exploits and thereby it heightens 
the ability and understanding of that class. And so it 
furnishes the weapons that shall achieve its own destruc- 
tion." 



CONTENTS 

CHAPTER PAGE 

Preface v 

Introduction ......... xv 



PROGRESSIVISM. 

I. The Next Step — Partial Collectivism 

II. The Approaching Revolution — to State Capitalism 

III. Labor as Government Property . 

IV. The New Division of the Nation's Income 
V. "Equal Opportunity" 

VI. Beyond Democracy as Majority Rule 

VII. The Class-struggle of the Small Capitalists 

VIII. The Labor Unions Under State Capitalism . 

IX. The Political Opposition under State Capitalism 

STATE SOCIALISM. 



i 

21 
46 
80 
96 
121 
131 

163 



X. The Transition to State Socialism — Through the 

Extension of Collectivism and Democracy . . 184 
XL The Transition to State Socialism — Through the 

Extension of the Principle of Class-struggle . 196 

XII. The Class-struggle Within the Working-class . 207 

XIII. State Socialism, or Laborism 220 

XIV. The State Socialist Program 247 

XV. Nationalistic Socialism 272 

XVI. The Transition to Socialism 297 

XVII. Socialism . . . . . . . . . .311 

Appendix A — Was Karl Marx a State Socialist? . .323 

Appendix B — The German Social-democracy as a 
"Labor" Party 328 

Appendix C — The German Social-democracy as a 
Progressive Party 345 

Appendix D — French Syndicalism — A Movement of 
the Aristocracy of Labor 366 

Appendix E— State Socialism in the American Social- 
ist Party 373 

Appendix F — The American Socialists and the Race 

Question . 377 

xxxv 



PROGRESSIVISM— AND AFTER 



CHAPTER I 
THE NEXT STEP— "PARTIAL COLLECTIVISM" 

We are witnessing the beginning of the greatest revo- 
lution of history. For the first time the small property 
owners are using the government effectively against the 
large. The temporary victories of the democracies of 
the cities of ancient times or of the middle ages were 
always followed by crushing defeats. But now the final 
overthrow of plutocracy is impending. Great Britain, 
France, Australia, the United States and all countries 
with democratic forms of government are at last estab- 
lishing, on the solid foundation of modern industrial de- 
velopment, a social system towards which all the social 
ideals, social philosophy, and sacrifice of a thousand years 
had hardly advanced us a step. For despite their demo- 
cratic political forms, even the most advanced countries 
of the world were, until quite recently, almost as com- 
pletely in the grasp of plutocracy as the ancient and 
mediaeval cities or the monarchies and republics of the 
eighteenth century. 

This change began to reach its present stage, indeed, 
only a few years ago. It was only in 1910 that the 
Australian Labor Party came into power and it was in 
the same year that the British Budget for the first time 

I 



2 THE NEXT STEP — "PARTIAL COLLECTIVISM" 

embodied the radical social reform and taxation princi- 
ples of Ministers Winston Churchill and Lloyd George. 
It was only about this time also that the movement to- 
wards political democracy began to gain its present ir- 
resistible headway in a number of American States — 
with the rapid adoption in one state after another of 
direct primary elections, of direct legislation and the 
recall of officials, and of the present amendments to the 
national constitution requiring the direct election of sen- 
ators and legalizing the income tax. 

Before three legislative years have passed, these meas- 
ures — so lately considered as ultra-radical and doubtful 
of success — are largely enacted into law. Already the 
remaining steps needed to convert the government into 
a complete political democracy are being prepared and 
few can now doubt their early enactment. 

In the meanwhile the present approach to majority 
rule has already led to significant changes in this and 
other countries. Collectivism — which had been making 
comparatively little progress for generations — began at 
once to take great strides. The very demand for more 
political democracy in this country, even before any 
governmental changes had been effected, brought govern- 
mental savings banks and parcels post. Soon these col- 
lectivist advances were followed by official proposals for 
the national operation of telegraphs and of Alaskan rail- 
ways. And now we have a growing movement, endorsed 
by leading statesmen of all parties, for a governmentally 
operated steamship line from Alaska along the Pacific 
Coast through the Panama Canal to the Atlantic Coast. 
All this together with the recent discussion of govern- 
ment ownership of railways in Congress points to the 
early nationalization of this vast body of capital. And 
at the same time the new currency law brings us halfway 
to the governmental control of banks. 



THE NEXT STEP PARTIAL COLLECTIVISM 3 

The government has not hesitated to give an appointed 
board a partial control over the money and credit of the 
country. It has initiated a valuation of the railways for 
the purposes of limiting, through a government board, 
the prices the railways are to charge and the profits they 
are to make. Now banking and transportation involve 
more capital than all the industrial "trusts" together, and 
we cannot doubt that the same kind of control will be ex- 
tended over these also within a very few years, as al- 
ready advocated by the Progressive Party. 

Extensions of the economic functions of the American 
government are taking a thousand other forms. The 
present government — which aims to maintain competi- 
tion as long as it is able, in certain restricted fields — 
has yet enacted a heavily graduated income tax and the 
Party in power proposes to enter more largely than ever 
into vast projects of governmental irrigation, govern- 
mental reclamation, governmental water-ways and roads, 
and governmentally developed water power. 

While in 1910 and 191 1, then, the chief progress to- 
wards democratic collectivism was in Great Britain and 
Australia, in 19 12 the centre of the world-wide struggle 
has undoubtedly shifted to a country the destiny of 
which is still more important for the economic future 
of humanity, the United States. The Liberal Party in 
England has no such a united majority at its back as it 
had in 19 10, while Australia has passed for the moment, 
and by a narrow majority, into the hands of the con- 
servatives. In the meanwhile the progressives have cap- 
tured two of the three parties of the United States and 
hold the whip hand in the third. The great change is 
just beginning to show itself nationally, but when we see 
what has already been done in the various states where 
progressivism controls we can have no slightest question 
as to what the near future holds in store. 



4 THE NEXT STEP — "PARTIAL COLLECTIVISM^ 

The demand for certain social reforms is largely re- 
sponsible for the political changes impending or already 
enacted, and as fast as these political reforms are ef- 
fected they will be put to use as weapons against the 
plutocracy — and the social reforms will follow. So the 
new state constitutions and easier methods of constitu- 
tional amendment are due largely to the demand for more 
democracy as a means of obtaining municipal owner- 
ship, the single tax in cities, or labor legislation — while 
the recall of judges and of judicial decisions, which also 
hit at the very root of our constitutions, have a similar 
origin. 

Woman suffrage, too, is advancing as rapidly as it is 
chiefly because it furthers certain social reforms — radical 
legislation for children and public schools, for working 
women and indigent mothers, and for lowering the cost 
and improving the standards of living. Great vested in- 
terests, like the liquor interests, are being forced by 
women voters to enormous financial losses. 

But the evolution of the present progressive move- 
ment to a more and more radical position in this country 
has not ceased. For measures are being prepared more 
radical than any yet enacted, and by the same forces 
that have recently been so successful. Party platforms, 
which may now be taken quite seriously, already promise, 
in certain instances, still other groups of radical reforms 
— especially in the shape of labor legislation, which I 
shall discuss in a later chapter (Chapter III). 

A party platform, however, even if sincere and in the 
hands of an administration that sincerely intends to en- 
force it, is not the best guide to the political probabilities 
of the immediate future. Though a political program 
may be quite honest and radical in its general declara- 
tions, its specific recommendations do not consist in the 
various radical positions of the groups that compose the 



THE NEXT STEP — "PARTIAL COLLECTIVISM" 5 

party, but in a minimum of measures upon which all 
groups can agree. The chief spokesman of the party is 
not so bound. A platform is promulgated at a given 
moment. The leader may be able, by seizing his occa- 
sions, to get all of the radical ideas of the party before 
the people, and to do it in such a way that every time 
more votes are gained than are lost. If we wish to dis- 
cover the real intentions of the various parties, then, we 
must look rather to the speeches and writings of their 
leaders, such as Wilson and Roosevelt, than to their 
formal platforms. 

Roosevelt, for example, favors graduated taxes, not 
as the Progressive platform does, merely as "a means 
of equalizing the obligations of holders of property to 
government" but as a means to "control the distribution 
of wealth." And he endorses the principle that part of 
the increment in land values which is due wholly to the 
community should go to the community, as we may see 
from his Confession of Faith: 

"Moreover, it would be well in Alaska to try a system 
of land taxation which will remove all the burdens from 
those who actually use the land, whether for building or 
for agricultural purposes, and will operate against any 
man who holds the land for speculation or derives an 
income from it based, not on his own exertions, but on 
the increase in value due to activities not his own." x 

Roosevelt classed this revolutionary policy as one 
which Progressives had definitely decided would "work 
well" at the present time, though on the sole condition 
of some "preliminary experiment," such as might be had 
in Alaska. This is not as yet a proposal to nationalize the 
social (or unearned) increment, since the actual user of 
the land, because he mingles with this social increment an 
increment of his own, is not to be taxed. But it has 



6 THE NEXT STEP — "PARTIAL COLLECTIVISM*' 

proved a comparatively easy matter in Great Britain, 
Germany, and other countries — and in some American 
States — to separate the value of individual improvements 
from the unearned or social increment, so that Roose- 
velt's proposal is, in reality, a radical step in the direc- 
tion of the complete nationalization (or municipaliza- 
tion) of ground rent. 

And, finally, Roosevelt not only wants prices and 
wages of monopolies to be fixed by the government, but 
he wishes also to give the workers some direct interest 
in industry through governmental means: "Ultimately 
we desire to use the government to aid, as far as can 
safely be done, the industrial tool users to become in part 
industrial tool owners, just as our farmers now are." 

Wilson's declarations are almost as radical. It is true 
that there seems to be a wide difference between the poli- 
cies of the two men and the political groups they repre- 
sent, but it is far less than appears. It is also true that 
Roosevelt and Wilson have both made some very con- 
servative statements of late, but these are by no means 
fundamental. It can easily be shown that both are mov- 
ing in the same direction, that the conservative scruples of 
each are in all probability only temporary, and that if 
either should cease to move forward, it would only be to 
lose the larger part of his following to the other. 

The radical character of both policies is well brought 
out in Wilson's statement with regard to the Socialist 
vote and Roosevelt's parallel statement with regard to 
the Socialist program. Wilson was told by a Socialist 
mayor that the vote by which this mayor was elected was 
"about twenty per cent Socialistic and eighty per cent 
protest." 2 Wilson proposes to bid for this eighty per 
cent of the Socialist vote, which he supposes (whether 
rightly or wrongly) to be a protest against trust govern- 
ment, and he is apparently ready to go in for a regular 



THE NEXT STEP PARTIAL COLLECTIVISM 7 

class attack against "plutocracy" in order to get this vote. 
Roosevelt, on the other hand, is reliably reported to have 
said that he was ready to take up eighty per cent of the 
Socialist program. His method is not to make a class 
attack even against "plutocracy," but to take up certain 
social reforms that have been endorsed by Socialists, and 
are at the same time thoroughly to the interest of the 
small property owner. 

However it is not only certain that both these policies 
can be worked together, but it is almost inevitable that 
the two tendencies upon which they are based, the col- 
lectivist and the anti-plutocratic tendencies, will grad- 
ually be combined into a single movement. 

It now appears from the position taken by Roosevelt 
since the formation of the Progressive Party, and from 
the attitude assumed by Wilson since his election, that 
the voters of both parties are headed in the same general 
direction and that the force of circumstances is bound 
to bring the Democratic progressives and Republican 
progressives together, even if the leaders should change 
their present course and decide to stay apart. Exactly 
how this united progressive movement comes about, 
whether through the gradual absorption of one group 
by the other, or through the amalgamation of the two 
groups, is of secondary importance. All the progressives 
are headed towards that State Capitalism, that partner- 
ship of capital and government which is loosely called 
"State Socialism," and the aim of which is the organiza- 
tion of capital and labor by government — primarily for 
the benefit of the majority of the owners of capital, i. e., 
of the small capitalists. 

Wilson's actual position and political philosophy are 
at present far more representative of the political class 
struggle of small capitalist democracy against large capi- 
talist plutocracy than is Roosevelt's, but Roosevelt's eco- 



8 THE NEXT STEP- 

nomic program is at present much farther advanced on 
the road to that collectivism which is now the small capi- 
talist's economic goal. The public regards Roosevelt as 
being already on the road to "State Socialism," and the 
public is right. Undoubtedly he is still very largely an 
opportunist, just as Wilson is, but, as both tie themselves 
up to the new policies and these policies become more and 
more popular, they are constantly becoming more and 
more thorough "State Socialists." As a matter of fact, 
however advanced his program may be, Roosevelt him- 
self is no further on the road to the small capitalist's 
collectivism than Wilson is. For the execution of the 
State Capitalist program requires two closely related 
policies, a constant increase in the power and functions 
of government on the one hand (the collect ivist tend- 
ency), and on the other hand a class struggle between 
the small capitalists and the large, so that the former, 
by the use of their superior numbers in politics, will be 
able to overcome the greatly superior economic power 
of the large capitalists and force the latter to that sur- 
render of their political power (though not of their prop- 
erty rights) which is necessary if the government is to 
represent "the whole system of business" and is to con- 
tinue to extend its industrial functions, including labor 
legislation, for the benefit of capital in general (the anti- 
plutocratic tendency). 

Roosevelt is far on the road to a collectivist program, 
but this program has no chance of being accepted by the 
small capitalists until he makes up his mind to emulate 
Wilson and to enter into a definite class struggle against 
the special interests. And conditions are forcing him 
more and more into this fight. 

On the other hand, Wilson, with such supporters as 
Bryan and Brandeis, is very far on the road to a declara- 
tion of war of small against large business, which we 



THE NEXT STEP "PARTIAL COLLECTIVISM^ Q 

can see very clearly in banking and railroad matters. 
He still hesitates to accept the collectivist program — 
which is the only effective remedy for plutocracy — on 
the main question of government control of the trusts. 
But just as Roosevelt, in spite of himself, is being drawn 
into conflict with the trust magnates ("good" as well as 
"bad"), so Wilson, in spite of himself, is being drawn 
towards the program of government control. He calls 
this the "regulation of competition," to be sure, and not 
"the regulation of monopoly," since he is unwilling to 
recognize the legal existence of monopolies, but the dif- 
ference, as I shall show, is not as great as it appears. And 
in the meanwhile he is leaving the door wide open, so 
that he may consistently move further in the collectivist 
direction. Conditions, once more, are forcing Roosevelt 
and Wilson, or rather their small capitalist followers, to 
an identical policy and an identical program, and even 
if one or both should attempt to stem the tide it could 
only result in some other popular leaders taking their 
place. 

Wilson says he opposes a partnership between govern- 
ment and business. Yet under his policy he says he 
hopes that "all friction between business and politics will 
disappear." If this does not imply an open partnership, 
it is at least "a gentleman's agreement." And obviously 
such a cordial relation between business and politics re- 
quires a considerable degree of harmony in the business 
world, a need which Wilson expresses in his determina- 
tion to control special interests, but only by assigning 
them "a proper place in the whole system of business." 
Wilson, in a word, advocates that form of government 
which represents the "whole system of business." 

Business, large and small, the President regards as 
one system in which there are to be no private monop- 
olies, while the large interests which are not monop- 



10 THE NEXT STEP — "PARTIAL COLLECTIVISM*' 

dies are also to be held in their proper place. And that 
place is to be determined by government and politics. 
In an address delivered in December, 19 10, he defined 
business as the "economic service of society for private 
property," which is about all the justification business, 
whether large or small, ever required or could require. 
But he immediately proceeded to define politics as "the 
accommodation of all social forces, the forces of business, 
of course, included, to the common interest." Business 
is to be controlled, but the control is to be directed ex- 
clusively against the "special" interests, and this control, 
being for the good of "the whole system of business," is 
obviously intended for the benefit of that part of the sys- 
tem which does not fall into the reprobated class of 
"special interests," that is, for the benefit of the small 
producers, traders, and investors, in a word, the small 
capitalists. 

As the representative of the interests of "the whole 
system of business," Wilson puts government above busi- 
ness and is very far from being a mere individualist. 
While he is not yet wholly a State Capitalist, he repre- 
sents the transition of Capitalism from the individualistic 
policy that still attempts to restore competition to the 
State Capitalist or collectivist policy that uses the gov- 
ernment for the business purposes of the small capitalists, 
who are the majority among property owners. There 
are already many instances in which, as to practical mat- 
ters, he either advocates the policies of State Capitalism, 
or takes pains to leave the door open for the subsequent 
adoption of these policies, while his general declarations 
of principle have already gone far in the State Socialist 
direction, and his speeches and messages to Congress al- 
ready contain as much of State Capitalism as they do of 
Individualism. 

Wilson realizes thoroughly that the present many-sided 



THE NEXT STEP — "PARTIAL COLLECTIVISM" II 

and radical proposals of social and economic reform are 
but the small beginning of what is to come in the way of 
governmental activities as to industry and labor: "We 
are just upon the threshold of a time when the system- 
atic life of this country will be sustained, or at least sup- 
plemented, at every point by governmental activity." 
(My italics.) He believes that "every one of the great 
schemes of social uplift which are now so much de- 
bated" are based upon "justice" and thoroughly realizes 
that we have before us a "great program of govern- 
mental assistance in the co-operative life of the nation." 
His only scruple as to this program is not one of criti- 
cism at all, but merely of delay until "the whole system 
of business" — which means the small capitalists — gains 
control of the government. "We dare not enter upon 
that program until we have freed the government." The 
government is to be freed from the domination of Big 
Business and is to be placed in the hands of "the whole 
system of business," i. e., the small capitalist majority. 

Already the government is rapidly being "freed." 
When, to the tariff law and the currency law is added a 
law giving a legislative, if not an administrative, com- 
mission a steadily increasing control over the trusts, un- 
der the direction of certain definite principles of price- 
control already accepted by all progressives, then indeed 
the government will be free to enter upon Wilson's 
"great program of governmental assistance in the co- 
operative life of the nation," until "the systematic life 
of this country will be sustained at every point by gov- 
ernmental activity." And it may not be more than a 
year or two before the Inter-State Trade Commission is 
at work. 

We must remember that the main point in this col- 
lectivistic program, industrial commission control over 
large corporations under the principles laid down 



12 THE NEXT STEP "PARTIAL COLLECTIVISM^ 

by Congress j is favored by many of Wilson's leading 
supporters, and that Wilson himself has made many 
statements which prove that he is perfectly ready to 
regulate Big Business, provided monopoly is not legalized 
or recognized, and provided the government has become 
powerful enough effectively to carry out this regulation. 
He. says he is willing that the big corporations "should 
beat any competitor by fair means." He claims also that 
"by setting the little men of America free you are not 
damaging the giants," and that he merely wishes to re- 
store competition in so far as it is natural. This he 
made clear on a highly important occasion, his first key- 
note speech after his nomination (that of August 7th) : 
"I am not one of those who think that competition can 
be established by law against the drift of a world-wide 
economic tendency; neither am I one of those who be- 
lieve that business done upon a great scale by a single 
organization — call it corporation, or what you will — is 
necessarily dangerous to the liberties, even the economic 
liberties, of a great people like our own, full of intelli- 
gence and of indomitable energy. I am not afraid of 
anything that is normal. . . . Power in the hands of 
great business men does not make me apprehensive, un- 
less it springs out of advantages which they have not 
created for themselves. . . . While competition can- 
not be created by statutory enactment, it can in large 
measure be revived by changing the laws and forbidding 
the practices that killed it, and by enacting laws that 
will give it heart and occasion again. We can arrest and 
prevent monopoly." 

In order to understand Wilson's exact position we 
must see just to what degree he expects to restore com- 
petition, whether he really expects materially to diminish 
the proportion of the nation's business done by the big 
corporations, or only to lower the trusts' prices to the 



THE NEXT STEP— 'PARTIAL COLLECTIVISM 1 3 

competitive level, without materially diminishing the pro- 
portion of the nation's business now in their hands. In 
his speech of February 20th, 19 13, explaining the new 
anti-trust law of New Jersey called "The Seven Sisters," 
he pointed out that these laws prevented only such agree- 
ments as "directly or indirectly preclude free and unre- 
stricted competition," that they prohibited "the acquisi- 
tion of stocks and bonds of other corporations," but that 
the law still permitted "any corporation to purchase any 
property, real and personal, necessary for its business." 
That is, Wilson expects to destroy "trusts" like the 
Standard Oil Company, but not corporations like the 
Steel Corporation, unless they follow policies he disap- 
proves. He intends to abolish holding companies like 
that of the Southern Pacific. But this speech shows that 
he knows he cannot prevent the direct purchase of the 
property of one corporation by the owners of another. 
The suggestion thrown out in his trust message of Jan- 
uary 20th, 1914, that individuals or groups might be 
prevented from controlling competing corporations 
through ownership, if acted upon, would inevitably lead 
to an irresistible demand for government purchase on 
the part of the owners themselves. 

Indeed, Wilson himself states that although Big Busi- 
ness as distinct from monopoly cannot yet be controlled, 
it is for the extremely significant and incontrovertible 
reason that if control is attempted Big Business "must 
capture the government in order not to be restrained too 
much by it." In other words, he refuses to allow the 
government to enter into the final struggle with Big 
Business at present only because he fears that the govern- 
ment would be captured by the enemy. And it is for the 
same reason, no doubt, that he still says, as against Roose- 
velt: "I do not want any man in America to fiK prices 
and to fix wages; I want them to fix themselves." 



14 THE NEXT STEP— "PARTIAL COLLECTIVISM'" 

Wilson is vigorously attacking the men he calls "the 
masters of the government of the United States/' who 
he is perfectly aware consist of those in control of big 
corporations generally, and not merely of those in con- 
trol of "trusts, holding companies, or concerns which are 
based exclusively or even chiefly on agreements to re- 
strict competition.'' So that the tight which he has 
started is already a real fight, as I have shown, and not a 
mere project like that of the Progressive program,, which 
gives no standard of price regulation, attacks no in- 
terest, and proposes the purely formal inauguration 
of a public board without specific instructions of any 
kind. Wilson's policy, on the contrary, is bound to go 
on from an attack on ''monopolies" to an attack on Big 
Business, which he knows can be reached only by the 
Inter-State Trade Commission or by government owner- 
ship. As soon as he feels the government is strong 
enough he will provide the commission with a definite 
anti-plutocratic policy on which to work. Already, un- 
der the guise of "'regulating competition." he has laid 
down certain principles which will guide this com- 
mission in the regulation of prices, namely, that retailers 
shall not be controlled, and that prices shall be the same 
in different localities, allowing only for the cost of trans- 
portation. His "Seven Sisters" bill, in which he in- 
corporated these principles while Governor of New 
Jersey, thus means a real fight not only against monopo- 
lies, but against all Big Business, because there is some 
element of monopoly in them all. 

Wilson's "regulation of competition" idea contains a 
really effective policy for the commission to begin its 
work with, which is a far better method than that of the 
Progressive platform, to appoint the commission first and 
to leave the price policy for a later and entirely un- 
settled treatment. Wilson knows that this plan will 



THE NEXT STEP— ^PARTIAL COLLECTIVISM^ IS 

immensely cut down the value and earning capacity of 
the large corporations, that is, that it will bring on what 
we may well call "a fight for blood." Senator La 
Follette claims that they will lose several billion dollars 
by such an attack. It will be a complete reversal of the 
Roosevelt policy, as declared in his message of January 
31, 1908: "When once inflated capitalization has gone 
upon the market and has become fixed in value its exist- 
ence must be recognized. . . . The usual result of such 
inflation is therefore to impose upon the public an un- 
necessary but everlasting tax." (My italics.) 

In so far as the big corporations represent efficiency 
and economy, as well as special privilege, they will re- 
main in existence even after their profits are thus cut 
down, but in so far as they represent nothing more than 
special financial control of the market, they will either 
be destroyed or get themselves bought out at a high price 
by the government. Wilson accuses the Steel Trust of 
having an imperfect organization, of having too much 
debt, and of having bought up inefficient plants. An- 
other lasting effect, then, of his policy will be, not to 
destroy the more solid of the big corporations, but to 
force them to become more efficient and so still more 
formidable to would-be competitors and to carry them 
still faster along the road to monopoly. But, under the 
Wilson plan, they will nevertheless be at the mercy of the 
government as to finance, prices, and their whole busi- 
ness policy. If at that time Wilson still holds that pri- 
vate monopoly is intolerable and cannot be regulated, 
then he will be forced to a public monopoly, and govern- 
ment ownership and operation — which, Brandeis points 
out, is the only alternative. 

We can rest assured, then, that "the regulation of 
monopoly" will be all the more necessary from the small 
capitalist standpoint after "the regulation of competi- 



1 6 THE NEXT STEP — "PARTIAL COLLECTIVISM" 

tion" will have reached the natural limits I have men- 
tioned. Not only will Wilson be forced to follow along 
the lines indicated, but government ownership itself 
will be more and more frequently advocated, as it already 
has been in the case of telegraphs and telephones. Al- 
ready Bryan has favored government ownership of rail- 
ways from time to time, and the railroads have nearly a 
third of the industrial capital of the country. Ex-Gov- 
ernor Foss, Senators Martine, Thomas, and Lane, Bran- 
deis and other prominent Democrats have also suggested 
it. And now railroad presidents are crying it out from 
the house-tops — as a horrible but highly probable con- 
tingency, which they would clearly prefer, however, to 
having their profits interfered with. Moreover, the 
physical valuation of railroads which is now going on, if 
it is used as the basis for fixing railway rates and wages, 
will reduce their earning power along the same lines as 
Wilson proposes to follow against the trusts, and may 
even bring the railroads themselves to favor nationaliza- 
tion, at a good price, before their values fall any further, 
which is the plan they have frequently followed abroad. 
As B. L. Winchell, Chairman of the Frisco System, says : 
"No government in acquiring railroads has ever paid an 
improperly low price for them" — and he speaks, of 
course, from the standpoint of the railways. No doubt 
the price paid will be high enough to prevent any con- 
siderable reduction of rates, increase of wages, etc., for 
many years. 

It will not do to call "small capitalists" those individ- 
uals and corporations who are vainly trying to secure 
legislation to enable them to compete with the largest 
corporations — which they call "regulating competition," 
since to-day these capitalists represent millions of dollars 
in nearly every instance. They are the middle group 
among the capitalists, mere millionaires as a rule (against 



THE NEXT STEP— "PARTIAL COLLECTIVISM" 1 7 

the multi-millionaires). The Democratic progressives, 
like the Progressive Party and the Republican pro- 
gressives, will be forced more and more to rely, not upon 
this middle group, which no legislation can materially 
aid, but upon the really small capitalists, such as the 
farmers, whose interests will be far more effectively 
served by the regulation of monopoly through the Inter- 
State Trade Commission or by government ownership 
than by the mere regulation of competition. And these 
really small capitalists, farmers, retailers, etc., when in 
complete control, will make a far more radically anti- 
plutocratic progressive movement in Republican and 
Democratic and Progressive Parties than do the would- 
be "restorers" of competition who control these parties 
to-day. 

In facing the currency question, Wilson was squarely 
confronted by the real issue: private control vs. public 
control of industry, competition vs. collectivism. Be- 
cause the American system of credit is concentrated, he 
said, when Governor of New Jersey, "the growth of the 
nation, therefore, and all its activities are in the hands 
of a few men." The inference is that those who control 
credit control the country. Evidently then democracy 
requires an exclusively governmental control— and 
not a governmental control of currency accompanied by 
the control of credit by the smaller bankers, as in the 
Wilson measure. Wilson's speech, then — and not his 
currency reform — -represents those elements of public 
opinion that are now determining elections. The de- 
mand of the small capitalists and middle classes, who are 
coming to govern the country, is not that the government 
should intervene, and, after having taken the industrial 
power of the few very large capitalists into its own 
hands, should then deliberately give a part of it (the 
control of the Sectional Reserve Associations) to an- 



1 8 THE NEXT STEP— "PARTIAL COLLECTIVISM" 

other group of somewhat more numerous and less 
wealthy capitalists, but that the government should keep 
this power and use it for the "public" good — which 
means primarily the good of the small capitalists and 
middle classes — at least, as long as they continue to con- 
trol the government. 

Now let us see how Roosevelt and the Progressive 
Party fall in with the Wilson policy. Roosevelt's recom- 
mendation of an Inter-State Industrial Commission, with 
power of "drastic supervision, if necessary," is best ex- 
pressed in his Century article. This commission is to 
have power "not only to enforce publicity, but to secure 
justice and fair treatment to investors, wage-workers, 
business rivals, consumers, and the general public alike." 

"We believe that the business world must change from 
a competitive to a co-operative basis. We absolutely re- 
pudiate the theory that any good whatever can come 
from confining ourselves solely to the effort to reproduce 
the dead-and-gone conditions of sixty years ago — con- 
ditions of uncontrolled competition between competitors, 
most of whom were small and weak." 3 

The only possible meaning of freedom of competition, 
Roosevelt points out, would be "freedom for unscru- 
pulous exploiters of the public and of labor to continue 
unchecked in a career of cut-throat commercialism, 
wringing their profits out of the laborers whom they 
oppress and the business rivals and the public whom they 
outwit." 

And yet, while Roosevelt does not wish, in many cases, 
to restore competition, he strongly favors the fortunes of 
would-be competitors of the large corporations, as against 
the fortunes of those who control them. He discrimi- 
nates in the above article and elsewhere only against "the 
very rich." (My italics.) When he speaks of very 
heavy taxes against great inheritances he proceeds to 



19 

point out that he means inheritances "of colossal size," 
and when he recommends "a heavily graded income tax, 
along the same lines/' he takes a double precaution, both 
repeating his exemption of the merely rich and pointing 
out that he is "discriminating sharply in favor of earned, 
as compared with unearned, incomes." 

Moreover investors are to be guaranteed a "reasonable 
reward," which he defines as "a reward sufficient to make 
them desirous to continue in this type of investment." 
That is, he holds the prevailing, the customary, rate of 
profits to be reasonable. Roosevelt goes farther and 
bases the prosperity of all the community on that of the 
business man. That is, the capitalists must not only be 
fully protected, but they must be protected before any 
other class : "It is an absolute necessity that the invest- 
ors, the owners, of an honest, useful, and decently man- 
aged concern should have reasonable profit. It is impos- 
sible to run business unless this is done. Unless the busi- 
ness man prospers, there will be no prosperity for the 
rest of the community to share." 

There is certainly very little difference between this 
and Wilson's declared intention to make the increase of 
small capitalists, such as he had known in small towns in 
Indiana, the aim of his policy. Wilson will not guaran- 
tee the customary profits. He proposes on the con- 
trary to knock the water out of the trusts, which means 
to force rates and prices down by one means or another. 
He proposes the restoration of competition where pos- 
sible, but seems to favor government ownership in the 
case of telegraphs, and certainly stands for a rigid gov- 
ernmental control of banks and railways. But he will 
hear nothing of taxation graduated to the point of re- 
distributing wealth — even that of the very rich. Roose- 
velt on the other hand favors "a more general division 
of well-being" by the method of graduated taxation, but 



20 THE NEXT STEP- 

will protect the prevailing rate of profits. Wilson would 
attack cautiously the high profits of the controlling own- 
ers of railroads, trusts, and banks. Roosevelt would 
have a governmental control largely for the purpose of 
guaranteeing and protecting the present rate of profit, 
but he would attack cautiously those among the very rich 
who, he considers, do not earn their incomes. The 
former is the more immediately valuable, the latter ulti- 
mately the more important, policy. 

With such powerful political supporters, who differ 
only as to methods, there can be no further doubt that 
the anti-plutocratic movement towards an efficient gov- 
ernment control or government ownership of the trusts 
and railroads will prove irresistible, or that, along with 
it, all the other radical reform policies now under dis- 
cussion will go into effect — especially vast governmental 
expenditures for the improvement of the productive effi- 
ciency of that greatest of all capitalistic resources, the 
laborer. 



CHAPTER II 

THE APPROACHING REVOLUTION— TO STATE 
CAPITALISM 

What, now, are the underlying principles of the new 
progressivism ? When it is fully worked out and put into 
effect, where will it have carried us? 

To Roosevelt progressivism means first of all "social 
reorganization," to Wilson it means "the reconstruction 
of economic society," while to Winston Churchill, who 
represents a somewhat similar position in Great Britain, 
it means "a more scientific social organization." Both 
Wilson and Roosevelt speak of the pending change as a 
revolution. And if we look a little more closely we see 
that Wilson is right, that what is being revolutionized 
is industry rather than society generally (though it is 
true that society is being revolutionized together with 
industry) ; and we see also that the means to be used 
are almost exclusively governmental. "Government and 
industry," as Roosevelt says, "are the two chief func- 
tions of our social organism." So without doing any 
violence to the broad and perfectly correct generaliza- 
tions just quoted, we may supplement them and make 
them more definite by saying that the new movement 
aims primarily at the more scientific organisation or 
reorganisation of industry by government. 

In a recent article Roosevelt has rightly termed this 
policy, "partial collectivism" : 

"The growth in the complexity of community life 
means the partial substitution of collectivism for indi- 

21 . 



22 APPROACHING REVOLUTION — TO STATE CAPITALISM 

vidualism, not to destroy, but to save, individualism." 1 
The individualism Roosevelt hopes to preserve is the sys- 
tem of commercial or industrial competition by private 
capital. But he sees that this system can only be par- 
tially preserved, and that even this can be done only by 
ceding a large part of the field to collectivism. 

Positively, collectivism means the extension of the eco- 
nomic functions of the government. Negatively, it means 
the subordination or suppression of private property by 
the government — in the interest, always, of those who 
control the government though, of course, they always 
claim to act in the name of society as a whole. In this 
sense President Wilson is as thoroughly a collectivist 
as ex-President Roosevelt. So also are some members 
of his Cabinet, as we may see from the declaration of 
the Secretary of Labor, W. B. Wilson, concerning cer- 
tain employers : 

"They say their property is their own : that they have 
the right to do with it as they please. Maybe they have, 
but those who take that position have a false conception 
of the titles to property. Law has created those titles, 
not primarily for the welfare of the man to whom it 
conveys it, but for the welfare of the community. So- 
ciety has conceived, whether rightfully or wrongfully, 
that the best method of promoting the welfare of society 
is to convey titles to individuals in real estate and per- 
sonal effects. It does it, however, not for the welfare 
of the individual, but for the welfare of the great mass 
of the people. 

"If any individual or corporation takes the ground 
that the property is his own, that he has the right to do 
with it as he pleases, and fails to take into consideration 
the fact that the title has only been conveyed to him as a 
trustee for the welfare of society, then he is creating a 
condition that will cause society to modify or change 
these titles to property, as it has a perfect right to when* 



APPROACHING REVOLUTION— TO STATE CAPITALISM 23 

ever in its judgment it deems it for the welfare of society 
to do it." 2 

This is negative collectivism. Yet as soon as the gov- 
ernment acts negatively and interferes with industry it 
must act positively and assume some industrial function. 

In laying out their programs, Roosevelt, Winston 
Churchill, Lloyd George, and others have showed in the 
most concrete and definite way just what the first meas- 
ures and policies are by means of which industry is to be 
reorganized. But the fundamental principles that under- 
lie the whole structure they have not yet formulated — 
which is not surprising, since the movement in Great 
Britain and America really began only about 1910 — as I 
have pointed out. For these fundamental principles let 
us turn to Germany, where the government long ago 
(under Bismarck) took certain steps which are recog- 
nized by the German and British leaders to have been 
in the same general direction in which they are now 
going, namely, the inauguration of government owner- 
ship of railways and of government insurance of work- 
ingmen. Though progress in Germany was then, and 
is still, limited by an antiquated form of government, 
and it is Great Britain and America and not Germany 
that must lead in the new movement, these latter coun- 
tries up to the present moment have scarcely caught 
up with Germany in the progress made towards a gov- 
ernmental organization of industry on a scientific plan. 
And while the progress of Germany is at present much 
slower than ours, owing to its semi-absolute government, 
its clericalism, landlordism, and militarism, still Ger- 
man statesmen and publicists, stimulated by these early 
reforms, have given more time and thought than those 
of any other country to the possibilities that lie in "par- 
tial collectivism. 1 ' 



24 APPROACHING REVOLUTION TO STATE CAPITALISM 

Perhaps the most able German formulation of this 
form of collectivism is that of the world-renowned econ- 
omist Adolf Wagner — which dates from 1887. The 
chief points of his program, which is that of a large 
part of Germany's educated classes, are these 3 : 

1. A better organization of industry. This is pre- 
cisely the Roosevelt and Churchill idea. Industry must 
be assured "an orderly course.'' Already the growth of 
large corporations and banks has automatically intro- 
duced a good deal of order into privately owned industry, 
especially in America. This organization has now only 
to be further controlled and directed by government. 

2. A larger part of rent, interest, and profits to be 
diverted into public channels. The nationalization (or 
municipalization) of capital — at least to a large degree. 
This process to be extended not only to monopolies, but 
to those large corporations that tend towards monopoly. 
As illustrations, Wagner takes the means of transporta- 
tion, the banking and insurance systems, and municipal 
lighting and markets. But the same principles would 
lead him much further in view of the growth of large 
corporations (even aside from outright monopolies) since 
1887. 

3. Taxation to make wealth and income somewhat 
less unequal. The taxes so raised to be expended ex- 
clusively upon the poorer and weaker classes. 

4. Public expenditures which especially benefit the 
rich or well-to-do to be paid for largely by special taxes 
levied against these classes, or by specially high charges 
for the public services they utilize. 

5. An entire reversal of the older attitude of the gov- 
ernment to labor — which I shall discuss in the following 
chapter. 

For the most part this is simply a more conscious and 
complete formulation of the principles of the leaders of 



APPROACHING REVOLUTION TO STATE CAPITALISM 2$ 

the new progressive movement, and where it does pass 
beyond them it is only to adopt a principle to which the 
logic of their position and the logic of events must in- 
evitably lead them — and without delay. 

Already Roosevelt has favored the nationalization of 
Alaskan railways, as an experiment, while Churchill has 
definitely declared for railway nationalization when the 
time is ripe. After this the nationalization of mines and 
forests and oil wells, for which there are already foreign 
examples, will be relatively easy, and the process will 
scarcely stop until, as Wagner desires, all large corpora- 
tions are either publicly operated or so thoroughly con- 
trolled, as the banks are already beginning to be, that 
private operation becomes rather a name than a reality. 
And to this same group of the government's industrial 
activities are to be added all those new enterprises, like 
the large-scale building of canals and roads, irrigation, 
reclamation, and re-forestation, where there is often no 
previously existing private corporation to be absorbed. 
Churchill expresses this part of the program even more 
broadly than Wagner: "The whole tendency of civili- 
zation," he points out, "is towards the multiplication of 
the collective functions of society." 

Already graduated taxes are in force in all advanced 
countries, and they are being made higher every year. 
In Great Britain and Australasia they have been coupled 
largely with social reforms for the benefit of the poorer 
classes, while both Churchill and Roosevelt advocate 
them as a means also to secure a fairer distribution of 
wealth and income. 

A related form of taxation, the tax on ground-values 
of land, lies in principle between nationalization and di- 
rect taxes on wealth or income. Already the British 
government is taking a fourth of the future rise of 
ground values in cities and Churchill predicts that in the 



26 APPROACHING REVOLUTION TO STATE CAPITALISM 

immediate future the government will take all of this 
immense fund of wealth. 

And these enormous new governmental revenues are 
to be expended for the benefit of labor, at least to the 
extent that such expenditures may be expected to be re- 
paid to "society" through an increase of greater indus- 
trial efficiency and output (see Chapter III). 

The benefit of some of these reforms may, indeed, be 
said to go to "society as a whole." But this phrase 
must not be misunderstood. "Society as a whole" means 
society as it is, with the sole exception of the monopolists 
and very wealthy. In so far as society as a whole, or 
industry as a whole (which Wilson calls "the whole sys- 
tem of business"), secures the chief good of any re- 
form, this obviously means the division of its benefits 
among the various parts of society, in the same pro- 
portions as wealth and income now distribute themselves 
— with the one exception which has just been mentioned. 
The supposed exception of labor, which is said to secure 
special benefits, will be dealt with in the next chapter. 

Let us examine then what is secured by each social 
group under this policy of reform for the benefit of 
"society as a whole." I have quoted President Wilson's 
remark that he is serving "the whole system of business." 
Whatever incidental advantages his policy may bring to 
other social groups it certainly means that he is serving, 
primarily, not society as a whole, but the business class 
as a whole. 

Similarly the German cities, where identical prin- 
ciples are being applied, are obviously governed ac- 
cording to the business interests, since the electoral laws 
explicitly give these business interests control. A promi- 
nent advocate of social reform, Frederick C. Howe, 
points out that the "bankers, merchants, real-estate specu- 
lators, and professional men," to whom the government 



APPROACHING REVOLUTION TO STATE CAPITALISM 2J 

of the German cities is assigned, regard the additional 
burdens of taxation these reforms impose "as a kind of 
investment from which dividends will be realized in the 
future." 4 

"They say that those cities increase in population and 
trade that spend most generously for these things [efforts 
to beautify the city]. Nor is there any protest against 
heavy taxes for education, recreation and social purposes. 
For it is generally recognized that industry seeks those 
cities that do the most to encourage trade, that stimulate 
commerce by opening up industrial areas, that build 
docks and harbors and provide cheap factory sites. Em- 
ployers are attracted by educational opportunities which 
produce skilled workmen and a happy and contented pop- 
ulation. [Howe might have added that skilled workmen 
are attracted by such opportunities for their children, 
and will submit to somewhat less pay or longer hours in 
order to get them — which fact is fully appreciated by 
employers. ] 

"Persons of leisure choose their homes for the same 
reason, while travellers seek out the cities that make the 
most adequate provision for education, art, music, and 
beauty." And Howe concludes : "All these things bring 
money to the town. They promote business. They in- 
crease land values." 5 

The new principles as applied either in nations or in 
municipalities do indeed pay the business interests, as 
Howe not only asserts but amply demonstrates. The 
fact that the German business interests have adopted 
them, just as Bismarck nationalized the railroads and 
insured the workingmen, under a political system in 
which the popular parties were powerless, and the added 
fact that in both cases there was little, if any, pretense at 
altruism, prove that the whole movement is a business 
man's movement from first to last. 



28 APPROACHING REVOLUTION TO STATE CAPITALISM 

H. G. Wells in his "New Worlds for Old" also points 
out that the new policy of having the State do everything 
that can promote industrial efficiency (which policy he 
insists on calling Socialism) is to the interest of the busi- 
ness man. 

"And does the honest and capable business man stand 
to lose or gain by the coming of such a Socialist govern- 
ment?" he asks. "I submit that on the whole he stands 
to gain. . . . 

"He will pay a large proportion of his rent-rate out- 
goings to the State and Municipality, and less to the 
landlord. Ultimately he will pay it all to the State or 
Municipality, and as a voter help to determine how it 
shall be spent, and the landlord will become a govern- 
ment stockholder. Practically he will get his rent re- 
turned to him in public service. 

"He will speedily begin to get better-educated, better- 
fed, and better-trained workers, so that he will get money 
value for the higher wages he pays. 

"He will get a regular, safe, cheap supply of power 
and material. He will get cheaper and more efficient 
internal and external transit. 

"He will be under an organized scientific State, which 
will naturally pursue a vigorous scientific collective pol- 
icy in support of the national trade. 

"The whole tendency of civilization is towards the 
multiplication of the collective functions of society. 
There is a pretty steady determination, which I am con- 
vinced will become effective in the present Parliament, to 
intercept all future unearned increment." 6 

In the passages quoted Howe, like Wells, touches upon 
a second underlying motive of the revolution that is now 
taking place. Not only do local capitalists, employers, 
and persons of leisure gain from the new municipal re- 
form movement, whose chief aim is to serve them. It 
also pays these local groups to attract others of their 



APPROACHING REVOLUTION TO STATE CAPITALISM 29 

class, as far as they can, from other cities. The same 
motive exists in the national reform movement, as Wells 
suggests. It pays the business interests "to support the 
national trade, to attract capitalists, employers, persons 
of leisure as residents, and well-to-do persons as visitors." 
But this is only one of several forms of competition be- 
tween cities and nations. The product of local or na- 
tional capital can replace the product of foreign capital, 
even though capital itself cannot be persuaded to immi- 
grate to the locality or the nation, and the leisure class 
may be persuaded to buy the products of the city or 
nation even when they do not come to reside in it. Every 
policy that leads to greater industrial efficiency, every 
policy that improves or cheapens production, not only 
directly benefit local or national capital, but inevitably 
lead to export and so to further business expansion. 

Competition between private enterprises at home and 
other private enterprises abroad we are familiar with. 
Industrial competition between nations as wholes or cit- 
ies as wholes, though well-known, is less discussed. Yet 
in exact proportion as this kind of competition is de- 
veloped it implies the end of the private competition 
which has been the fetish of the economists and states- 
men of the past. This is why the discussion of "national 
efficiency" and of the means by which all the businesses 
of a nation or a municipality may alike be made more 
profitable has only just begun. And already we find 
Winston Churchill using as one of his chief arguments 
the necessity of meeting German competition by a na- 
tional effort to make all British industry more efficient. 
Not only is the new policy desirable from the business 
standpoint, in order to bring about industrial expansion, 
but, in view of inter-municipal and inter-national compe- 
tition, it is absolutely necessary and inevitable in order 
to avoid industrial contraction. 



30 APPROACHING REVOLUTION TO STATE CAPITALISM 

The business communities of nations and cities are 
forced to bid against one another for capital and for the 
patronage of the leisure class. And by degrees they are 
being forced to take up every measure that increases 
the efficiency of business and of labor to a degree suffi- 
cient to pay for its cost — even if a relatively long period 
is required before a favorable balance can be shown. 
The new governmental expenditures are regarded by 
the business community as investments, but they are in- 
vestments from which dividends are to be expected, not 
immediately, but, as Howe says, in the future. This post- 
ponement of returns, which is involved in these new 
governmental investments to a far greater degree than 
in most private enterprises, is of momentous importance. 
For at first the new policies were directed against the 
owners of private monopolies, whether on a national or 
municipal scale, and against the very rich (a closely re- 
lated, and largely identical, class). But this willingness 
to postpone returns means that still another group of 
business men is also to be sacrificed for the welfare of 
the business community as a whole. Those business men 
who must pay their share of the rapidly rising taxes of 
the new regime, yet cannot wait for the benefit of the 
long-postponed returns these taxes will ultimately bring, 
will not be able to survive. 

The individual capitalist is thus being subordinated, for 
the first time in history, to the interest of the capitalist 
class. Bernstein remarks that Bismarck had "thrown the 
landlord ideology overboard in order the more effectively 
to guard the consolidated land-owning interests." 7 The 
industrial statesman of the present is throwing overboard 
the older capitalist theories, according to which the profits 
of every honest capitalist were inviolable, in order to ad- 
vance more effectively the general interests of capital. 

A great Socialist publicist, Frederick Engels, has well 



APPROACHING REVOLUTION — TO STATE CAPITALISM 3 1 

said : "The modern state, no matter what its form, is 
essentially a capitalist machine, the state of the capitalists, 
the ideal personification of the total national capital." 
Engels pointed out that the state was used to prevent the 
encroachment of "individual capitalists" as well as that 
of the lower classes. In the name also of the "total na- 
tional capital," whole capitalist groups that have become 
dangerous are now being gradually eliminated. 

I have spoken of the consolidated capitalist inter- 
ests, in spite of two large groups that are gradually 
being sacrificed, the monopolists, including all land specu- 
lators, and those competitive interests which cannot stand 
the growing tax burdens. Considered by numbers these 
groups do not constitute more than two or three per 
cent, perhaps, of the capitalist classes. But their wealth 
is a considerable proportion, perhaps a third, of the total. 
It will avoid this ambiguity then to speak henceforth 
of the new policy not as that of capital but as that of the 
small capitalists. 

But what new force is enabling the small capitalists 
to gain the upper hand when, willingly or unwillingly, 
they have so long followed the lead of the plutocracy? 
The answer is two-fold. First, the total capital of the 
small capitalists, in spite of the recent concentration of 
wealth, is still far greater than the total capital of the 
large capitalists. Secondly, it is only through the pre- 
vious disorganization of the small capitalists that plu- 
tocracy has ruled. And, finally, with every step in 
government ownership or government control the power 
of the large capital is becoming relatively less. 

Emerson, in his Essay on Politics, has ably expressed 
the law that it is the total of their capital that gives any 
class the control: 

"The law may in a mad freak say that all shall have 
power except the owners of property; they shall have no 



32 APPROACHING REVOLUTION TO STATE CAPITALISM 

vote. Nevertheless, by a higher law, the property will, 
year after year, write every statute that respects prop- 
erty. The non-proprietor will be the scribe of the pro- 
prietor. What the owners wish to do the whole power 
of property will do, either through the law, or in defiance 
of it. Of course I speak of all the property, not merely 
of the great estates. When the rich are outvoted, as 
frequently happens, it is the joint treasury of the poor A 
which exceeds their accumulations/' (My italics.) 

Emerson here touches upon another issue besides the 
relation between large and small capital, namely the con- 
flict between capitalists generally and non-capitalists. I 
deal with this question in the following and later chap- 
ters. It must be said here, however, that Emerson's 
law, which is doubtless good for the present transition 
from private Capitalism to State Capitalism (i. e., from 
large capitalist to small capitalist control), will soon 
have to be amended — as soon, that is, as State Capitalism 
is in the saddle, and the evolution towards State Social- 
ism commences. Property will continue to count — but 
only because it is a source of income. Other incomes 
will also give their recipients a power corresponding to 
their magnitude. The Emersonian law may then be : 
"When the owners of the larger incomes are outvoted it 
will be the total income of the lower classes that exceeds 
their total income." 

However, the small capitalists are able at last to use 
their greater economic power only because conditions 
at last permit them to become effectively organized. As 
the new progressive movement is political, moreover, 
numbers count in it as well as wealth, and here the small 
capitalists and related middle-class groups are supreme, 
not only because they so greatly outnumber the large 
capitalists, but because their position between the latter 
and the rest of the population gives them the politi- 



APPROACHING REVOLUTION— TO STATE CAPITALISM 33 

cal balance of power. They are an absolutely indispens- 
able part of every movement against the large capitalists, 
and can therefore dictate the limits to which such a move- 
ment can go and secure its chief benefits for them- 
selves. They are equally indispensable to the large capi- 
talists in order to crush revolutionary movements from 
below, which might damage capitalism generally. This is 
why statesmen like Winston Churchill or Roosevelt, even 
when they have no preference for small capitalists at 
the outset, are being more and more forced to rely pri- 
marily upon them, both to ensure present progress against 
the resistance of reactionaries and to prevent any radical 
movement from going "too far." So Churchill wants 
everything possible done to strengthen and to increase 
the numbers of those middle-classes who "would cer- 
tainly lose by a general overturn," and in this way 
would prevent the masses from using superior numbers 
to gain what he calls "a selfish advantage." And simi- 
larly Roosevelt proposes, as soon as possible, to reinforce 
the already existing social bulwark composed of farmers 
by making the upper ranks of the workingmen also "tool- 
owners as well as tool-users." 

The large class of small capitalists is not only the 
backbone of the new movement, but has the most to gain 
from it. The benefits of the new reforms go chiefly into 
their pockets. And they are almost totally exempt from 
its burdens. Small farmers are exempted from a large 
part of the taxes everywhere, and in Australia, where 
land taxes are very heavy, their properties are exempt 
up to $25,000. Small business men and investors also 
are either exempt from income and inheritance taxes or 
pay a very small amount (see below). 

This small capitalist class must now be more clearly 
defined. I have shown that it does not include would-be 
competitors of the largest capitalists, of the "trusts," of 



34 APPROACHING REVOLUTION TO STATE CAPITALISM 

the railways, and of the banks. It is related to these 
largest capitalists in an entirely different way, namely 
as buyers, sellers, shippers, investors, or borrowers. The 
would-be competitors of the trusts, together with cor- 
porations of the second magnitude, the moderately 
wealthy, really compose an intermediate group. As a 
rule they are not directly attacked by the new movement, 
and even secure a large share of its benefits, though they 
pay a still larger share of the cost — which is by no means 
confined to the taxes already mentioned. This inter- 
mediate group includes, for example, those manufactur- 
ers, who now want foreign markets at any cost (and 
hitherto have usually got them), from a reciprocity that 
sacrifices the small capitalist to war. It includes those 
manufacturers who want the tariff removed from raw 
materials and the products of the small farmer so they 
won't have to continue to pay, in higher wages, for the 
increased cost of living. And it also includes the extreme 
protectionists who want to prohibit practically all im- 
portation of manufactured products and practically all 
reciprocity, since no industry is willing to be sacrificed 
in an exchange of markets. 

The new small capitalist dispensation, on the contrary, 
will favor a large measure of genuine reciprocity — small 
capitalist products, chiefly agricultural, alone excepted. 
While favoring home industries generally, the small 
capitalists will care relatively little whether it is one in- 
dustry or another that is so favored. And if new for- 
eign markets can be secured for one industry by sacri- 
ficing another and less important industry, they will be 
more than willing to make the change. New markets 
may be thus secured for small capitalist products and 
even when they are not there will be the benefit of some- 
what lowered prices. For the most protected industries, 
which have the most inflated prices, will be the first to be 



APPROACHING REVOLUTION— TO STATE CAPITALISM 35 

sacrificed. The imported goods will in such cases be 
considerably cheaper, and the growth of those national 
industries reciprocally favored by foreign countries will 
more than compensate for the industry abandoned — so 
that there need be no fall in the demand by workingmen 
for food and other small capitalistic products. 

The conflict then is between the farmer, the shop- 
keeper, the small professional and business man, on the 
one side, and the bulk of the larger capitalist interests, in- 
cluding the would-be rivals of the trusts and "restorers 
of competition" on the other. This is shown by studying 
the two opposing policies that tend to develop with the 
regulation and nationalization of railways. And I shall 
consider nationalization chiefly, because there the tenden- 
cies have a better opportunity to work themselves out to 
a logical conclusion. When railroads are to be national- 
ized the first question is the price to be paid. The small 
capitalists usually hold, with Senator La Follette, that 
the railways and industrial combinations are over- 
valued by billions of dollars, and that they should be 
allowed to pay dividends only on their physical valua- 
tion or on their cost of reproduction. This would mean 
the expropriation of a large part of the values now 
held by stockholders, who are, for the most part, large 
capitalists. But the securities of many railways are very 
largely in the forms of bonds, the ownership of which is 
widely distributed among small capitalists and even 
among savings banks, while several important roads are 
actually in the hands of receivers appointed by the courts 
to represent the bondholders and other creditors. No 
matter how much such railways may be overvalued, no 
matter if the large capitalists who have directed them are 
themselves the chief owners of the bonds, there is no 
way of reaching them without hurting these small in- 
vestors. And the same is true of certain conservatively 



$6 APPROACHING REVOLUTION TO STATE CAPITALISM 

managed roads in which small capitalists are heavily in- 
terested. There is a way, however, by which small capi- 
talists can tap the wealth of the large without harming 
other small capitalists, namely, by graduated income and 
inheritance taxes, which fall on all large capitalists alike, 
whether they are the owners of the industries or services 
being nationalized or not. 

Next comes the question as to how interest and prin- 
cipal of the purchase price are to be paid. If rates are 
much lowered and other improvements made perhaps the 
roads will be run only to cover operating expenses, to 
provide against deterioration, etc., but not to make profits. 
In that case an increase of the graduated taxation lev- 
elled against the rich can be made to pay the interest on 
the new debt — which, by the way, need not be called a 
deficit — for it would really be a subsidy to the small pro- 
ducers for whose benefit rates are lowered. Or if it is 
decided to make profits these may rise even above the 
sum needed for interest payments. They may then be 
used to replace indirect taxes and so to lower the cost of 
living, or they may be used for investment in railroad 
extensions and improvements, in canals, roads, irrigation, 
reclamation, re-forestation, and other enterprises in which 
small capitalists (and to a lesser degree the rest of the 
population) are interested. And finally such surplus 
profits may be used for social reforms designed to im- 
prove the conditions of labor in such a way as to increase 
its output and so to lower its cost. All of these are 
small capitalist policies — at least when standing alone. 

If the railway profits or surplus are to be expended 
on railway extensions and improvements, the question 
again arises as to which class of shippers and which 
localities are to be favored. But this is the same problem 
that occurs as to rates. Under a small capitalist govern- 
ment, of course, those industries and localities will be 



APPROACHING REVOLUTION — TO STATE CAPITALISM 3? 

favored in which small capitalists predominate or which 
in other ways serve their interests — for example, farm- 
ing communities and market towns, the makers of agri- 
cultural implements and the meat packers. For while 
the farmers are now hostile to those who control these 
last-mentioned industries, once they are in firm control of 
government and in a position to regulate prices, they will 
reverse their present attitude and demand favorable rates 
for all industries from which they buy or to which they 
sell in large quantities. And the same principles hold 
of other small producers and traders, such, for example, 
as those of the small towns, who, President Wilson con- 
fesses, are his chief care. 

But the railways, together with other means of trans- 
portation and communication, besides absorbing so much 
industrial capital, besides controlling all industry through 
rates, and, when nationalized, having such a weighty 
influence on all problems of government taxation 
and expenditure, are among the chief builders, the 
chief purchasers, the chief influences on land values, and 
the chief employers of the country. And railway policy 
in every one of these matters may be directed for the 
interest of small capitalists. It will greatly aid the gov- 
ernment, as the undertaker of large enterprises such as 
canals, reclamation, etc., to do its own railroad building 
and to abolish private contractors. These great works 
may be timed so as not to interfere with the farmers' 
demand for harvest hands on the one side, and on the 
other to absorb the unemployed when they are too numer- 
ous in the cities (see the next chapter). Similarly the 
enormous railway purchases are a government club by 
which nearly all industries may be largely controlled 
and directed in the way they should go. The steel 
industry, for example, even if not governmentally 
operated, could be largely controlled through its enor- 



38 APPROACHING REVOLUTION TO STATE CAPITALISM 

mous sales of rails and bridges to the railways. Not 
only could the prices paid by the railways, and so 
their cost of operation and rates, be considerably low- 
ered, but also the prices of wire fences and other farm- 
ers' supplies. 

I have mentioned the tendency of the new movement 
to appropriate for governmental purposes all the rise in 
city land values. This tendency will take some time to 
complete itself. In the meanwhile special provisions may 
be made by which the government shall get the chief 
share of the rise in land values due to railway exten- 
sions and improvements, and this may also include agri- 
cultural lands. 

And, finally, the railways employ a considerable pro- 
portion of the laboring class. The small capitalists' gov- 
ernmental policy as to wages and conditions of labor I 
shall consider below. But the railways have a vast num- 
ber of higher positions also at their disposal and the re- 
quirements for admission to their various departments, 
and for promotion, are of immense importance to the 
youth of the country, composing as they do a consider- 
able part of the total opportunities the country affords. 
These positions and promotions are now distributed in 
large measure through favoritism. With government 
railways, they will be under civil service. The civil serv- 
ice examinations, however, will be increasingly difficult, 
so that, in spite of a nominally free higher education, 
only the middle classes will be able to maintain their 
children during the many years of preparation required, 
and only these children will get the best positions. If, 
nevertheless, there remains a certain number of unoccu- 
pied or extremely inefficiently filled governmental posi- 
tions after practically all these middle class children are 
provided for, then a system of scholarships may be insti- 
tuted, but probably for no more than one or two per 



APPROACHING REVOLUTION — TO STATE CAPITALISM 39 

cent, or perhaps five or ten per cent, of the common 
children [see Chapter V]. 

Two great and irresistible forces, then, are driving us 
towards the nationalization (or municipalization) of rail- 
ways and of other fundamental services and industries: 
the interest of the small capitalists, the necessities of 
international competition. But a third force is already 
beginning to appear, and this, together with those just 
mentioned, may decide the issue. The railways and large 
corporations were able to secure the immense sums they 
needed only by the promise of exceptional profits. If 
now, under government regulation of rates and wages, 
these profits are no longer possible, no considerable 
progress can any longer be made in these tremen- 
dously important enterprises except as governments ad- 
vance the necessary money or allow an increase of rates, 
or use their credit to guarantee a good and safe return 
to investors. Under these conditions, the moment large 
expenditures for any reason become imperative, the 
clamor of all the rest of industry against the railways 
will carry the day. For example, Germany is rapidly 
electrifying her governmental railways, and many en- 
gineers believe Great Britain should do the same. But, 
as a leading member of parliament, Chiozza-Money, 
points out, only governments may be relied upon to carry 
this great change out, and British railways will have to be 
nationalized for the purpose. Similarly, he claims, the 
coal mines can be economically exploited, and the pres- 
ent wasteful methods, by which the future supply is 
sacrificed for immediate profits, can be ended, only by 
government operation. 8 

Electrification of railways and the conservation of 
coal are also becoming issues in this country. But there 
is another more pressing force of the same general char- 
acter. The small shippers will insist on the benefit they 



40 APPROACHING REVOLUTION TO STATE CAPITALISM 

expect from the Panama Canal in the shape of lower 
transcontinental rates. If private steamship lines do 
not carry out their expectations, they will adopt the prop- 
osition, now favored by a large number of Senators, 
of a governmentally owned line. This competition, if 
effective, whether through governmental or private lines, 
will hit the western railways so hard that they will be 
incapable of carrying out the extensions and improve- 
ments absolutely required by that relatively new part 
of the country. 

Most fair-minded and non-partisan observers believe 
that the policy of regulation will soon lead to govern- 
ment ownership of railways and mines. And, like the 
former editor of Collier's Weekly, they look forward to 
this result with equanimity. They do not desire to see 
the process of nationalization go further than this, but, 
much as they may regret it, they are convinced that it 
cannot be stopped at this point. 9 How far then will it 
go? Of course I speak of our day and generation. 

The bold step in "partial collectivism" marked by the 
new currency law shows that the process will not be 
limited to railways and mines. The sponsor for this last- 
named measure in the Senate, Senator Owen, says that 
its basic principle is nothing less than the nationalization 
of credit, "the supervision and control of the credit sys- 
tem of the United States cannot be safely confided to 
private hands." This momentous declaration was imme- 
diately followed by an explanation that presents the 
whole project as one of defense and protection of small 
borrowers. However this takes nothing away from its 
vast importance — ultimately to all elements of the 
population — but merely shows clearly the forces that 
are bringing about "partial collectivism" and will 
secure the lion's share of its benefits. Here is Owen's 
statement : 



APPROACHING REVOLUTION — TO STATE CAPITALISM 4 1 

"A great public utility bank conducted for the safe- 
guarding of the commerce and industry of the nation, 
and not conducted for the purpose of making profit ; con- 
ducted with a view to stabilizing the interest rate and 
safeguarding the national gold supply, is conducted as a 
Government function in the interest of all the people of 
the United States, and should not be in the hands of 
bankers whose point of view is to make personal profit 
out of the banking business and to exact as high a rate 
of interest as the commerce of the country can endure." 10 

That fundamental industries like the mines, forests, 
and oil-wells, will be nationalized before many years there 
can be little question, since the process is far advanced 
in other countries, and is already widely favored here. 

That all monopolies will either be wholly operated by 
government, or so completely controlled as to be prac- 
tically so operated, is becoming clearer day by day. And 
this policy will doubtless be extended also, as has been 
proposed, to those industries that control 50 or even 40 
or 25 per cent of a product. 

But closely allied to those branches of production that 
furnish articles indispensable to industry generally are 
those the products of which are indispensable to all ulti- 
mate consumers, and therefore to all laborers. To lower 
the cost of these is ultimately to lower the cost of labor 
to employers. Such industries will more and more fre- 
quently be controlled or operated largely by municipali- 
ties, but also in some cases by the nation. Municipal 
ownership of markets and slaughter-houses is already 
general on the continent of Europe and there is a large 
municipal bakery in Buda-Pesth. The milk supply is 
closely regulated abroad and municipal ice-plants are on 
the point of being established in several American cities. 
The tariff is being most markedly reduced on food prod- 
ucts and other necessaries. Railroad rates will be made 



42 APPROACHING REVOLUTION TO STATE CAPITALISM 

increasingly to favor such products and there is a grow- 
ing movement to study and organize scientifically meth- 
ods of marketing and storage. 

And we cannot doubt that the time is not far distant, 
after these three movements have developed, when all 
the largest corporations will either be nationalized (or 
municipalized) or else rigidly controlled at every im- 
portant point of their business. For when we shall have 
added to the monopolies or near-monopolies, all funda- 
mental industries, and then all large-scale industries deal- 
ing in consumers' necessities, as above suggested, we 
have already included a large majority of the large cor- 
porations, and the same principles will beyond doubt be 
extended to the rest. 

But even if the movement should go to the length of 
nationalizing or municipalizing all large-scale industries, 
which is all that is demanded by the present platform of 
the American Socialist Party, the number of capitalists 
in the country would scarcely be reduced by one per cent, 
and these would still receive the larger share of the bene- 
fit of the new policies, just as they receive the larger 
share of the benefit where railroads are being national- 
ized to-day. 

Let us now glance briefly in another direction and try 
to estimate the effect of the new collectivist taxation 
policies after they will have been more fully worked out. 
I have mentioned the recent step towards the appropria- 
tion of all the future rise in city land values in Great 
Britain. In Germany, when a law almost as radical was 
recently enacted, all parties voted for the bill, and Howe 
says that it was frankly admitted by all that land 
values are created by the growth of the community, 
rather than by any efforts of the individual. In Sydney, 
Australia, the municipality taxes one-sixth of the rise 
in land values and raises its funds almost exclusively 



APPROACHING REVOLUTION— TO STATE CAPITALISM 43 

in this way. Yet it was the real estate owners alone who 
were allowed to vote on the method of taxation. The 
taxes on vacant land were thus raised 200 to 500 per 
cent, but those on improved property fell to one-third or 
two-thirds. 11 No wonder that Howe tells us (in "Privi- 
lege and Democracy in America") that the single tax 
means the revival of capitalism, on a small scale, of 
course, and the indefinite continuation of the struggle 
between capital and labor. 

That the appropriation by the state of a sum which, 
even when the tax is applied to city lands alone, is 
even greater than the value of the railroads — and the 
expenditure of this sum in ways I shall indicate — will 
mean a revolution cannot be questioned. I have shown, 
however, that this revolution is to the interest of the 
small capitalists, and I shall show later that the rest of 
the population also gets a share, if a much smaller share, 
of the benefit. 

Other radical tax measures also benefit the small capi- 
talists more than other classes. When Vice-President 
Marshall says that the abolition of inheritance would 
probably receive the votes of two-thirds the population if 
sums under $100,000 were exempt, he is doubtless cor- 
rect — and it is probable that even to-day the majority 
of small capitalists would go that far. Oklahoma, a 
farming state, has already made a beginning, by abolish- 
ing all inheritance above a million and a quarter and all 
collateral inheritance over $495,000 — with a graduated 
scale of partial confiscation for lesser legacies. The 
principle is far from Socialistic. John Stuart Mill advo- 
cated it in 1852, as a method of giving the principle of 
private property a fair trial. 

And now Senator Norris proposes in the United States 
Senate a measure to tax large inheritances from one 
per cent on $50,000 to 75 per cent on $50,000,000. This 



44 APPROACHING REVOLUTION — TO STATE CAPITALISM 

measure, which exempts small fortunes, and is clearly 
and frankly confiscatory as to larger fortunes, received 
the active support of twelve Senators — after a very brief 
agitation in its favor. And this support came from states 
where small capitalists are in an overwhelming majority 
as compared with non-capitalists. 

Income taxes also, no matter how steeply they may 
be graduated at the top, are supported by small capi- 
talists. Recently the German government decided to 
take, for a brief period, a very considerable part of the 
incomes of its multi-millionaires, and by no means a small 
part of the incomes of its wealthy classes. Even if this 
tax is made permanent, as it may be, and even if it should 
confiscate the whole of the largest incomes above a cer- 
tain amount, say above $25,000 or even above $10,000 
or $5,000 (the average income from a $100,000 estate) 
there would still be no fundamental change in the char- 
acter of society. For still, if the experiment were tried 
in America, 97 per cent of the small capitalists would 
not only be exempt from confiscation, but would prob- 
ably be exempt from all such taxes. Moreover they 
would enjoy the larger part of the benefit of the expendi- 
ture of all these vast sums thus placed at the disposal 
of the government. 

The present national income tax in this country is cal- 
culated on the supposition that there are only about 300,- 
000 families in the country with incomes over $5,000. 
As there are scarcely less than 10,000,000 small capital- 
ists in the United States to-day, this means that 97 per 
cent of all capitalists would gain greatly if incomes over 
$5,000 were expropriated, while if incomes over $10,000 
only were taken, 99 per cent would benefit. Certainly 
income taxes, and probably also inheritance taxes, will 
not be so steeply graduated as this in the present genera- 
tion. But they will move rapidly in this direction, and 



APPROACHING REVOLUTION— TO STATE CAPITALISM 45 

the nature of the movement is shown by lengths to which 
it may reach. 

The industrial functions assumed or narrowly con- 
trolled by government may thus come, within our life- 
times, to aggregate easily a third of the nation's capital, 
while the sums raised by graduated and land taxes may 
bring the total expenditures of government on these en- 
terprises and on canals, roads, reclamation, education and 
social reform to more than half of the nation's income.* 
Yet 97, 98, or 99 per cent of the capitalists will remain 
and will control the government. And these will be the 
chief beneficiaries of the new system as they were of 
the old. 

But the great revolution we are witnessing is also 
bringing great benefits to the rest of the people, the non- 
capitalist classes — and we may confidently expect these 
benefits to continue. Let us then examine the nature 
and extent of the improvements the small capitalists' 
collectivism will bring to the non-capitalist classes. 

* I have barely touched upon the movement for the nationaliza- 
tion of coal mines in the United States. One of the clearest evi- 
dences of this tendency is the recommendation of the present ad- 
ministration that a part of the Alaskan mines be owned and operated 
by the nation, partly "in order to check monopoly." Wherever 
this policy has been tried — and it has been tried very often — it has 
led to a steady increase of government ownership. 



CHAPTER III 
LABOR AS GOVERNMENT PROPERTY 

The governmental attitude to labor is being com- 
pletely revolutionized by new economic factors. Before 
the era of industrial concentration, and before the new 
progressive movement began to make itself felt, compet- 
ing capitalists regarded labor as a commodity to be 
bought like crude raw material; now that the capitalist 
class is approaching a general consolidation, under small 
capitalist political control, labor is coming to be regarded 
like machinery, as a means of production which must 
itself be produced, and the production of which can be 
effectively regulated by government in proportion as gov- 
ernment becomes a more efficient industrial instrument. 
Formerly capital was only interested in the buying and 
selling of labor power and in saving labor power within 
the factory. Now capital is interested in the cost of 
production of the laborer, in making him efficient, in 
using him efficiently, in economizing him from the cradle 
to the grave— saving him as a working animal, or as a 
working machine in which certain human traits also can- 
not economically be ignored. 

A certain kind of efficiency is more and more required 
in modern industry, namely speed, so that more may 
be gotten out of the rapidly growing investment in ma- 
chinery, and the demand for this quality of labor is 
greater than the supply. At the same time the available 
labor supply is becoming restricted in many other ways, 

4 6 



LABOR AS GOVERNMENT PROPERTY 47 

and the more far-sighted capitalists and industrial states- 
men are therefore coming to regard with keen disfavor 
the waste, by other capitalists, of workingmen's lives and 
health, and especially of the lives and health of the work- 
ingmen's children. The lowered cost of travel, more- 
over, has greatly extended the labor market, so that 
labor which does not receive the treatment which it de- 
mands can go hundreds of miles on land or thousands 
on water to seek better wages or a lower cost of living. 
Employers, on the contrary, are being checked in their 
search for a larger labor supply. The small capitalists 
all over the world and especially those who control the 
Western States of America, Canada, Australia, and 
South Africa, make use of the racial pretext to exclude 
immigrant laborers who, as small farmers or shop- 
keepers, threaten to become dangerous competitors. At 
the same time the more efficient, healthier, and more 
ambitious laborers have less children than formerly and 
make every effort to put these children into the higher 
occupations, and so prevent them from augmenting the 
supply of common labor. 

Therefore, as the supply of cheap labor is gradually 
being exhausted, the cost of production of labor is be- 
ing more and more considered, and more and more 
money is being invested privately and governmentally in 
efforts to improve the quality as well as the quantity of 
the labor supply. 

Wilson and Roosevelt now agree that the working- 
man is to be regarded as the greatest natural resource 
of the country, i. e., of "the whole system of business" — 
even more important than the land itself. "The con- 
servation of human life and energy lies even nearer to 
our interests than the preservation from waste of our 
material resources," says Wilson. (Message of Decem- 
ber 2d, 1913.) The comparison is most suggestive. Like 



48 LABOR AS GOVERNMENT PROPERTY 

the other natural resources, coal, timber, etc., labor was 
formerly regarded as an unlimited supply, which could 
be endlessly and cheaply replenished, and could be ex- 
ploited at once to the last degree and without much re- 
gard to waste. Now the working people of a country, 
being limited in supply, are considered its most valu- 
able property, the greatest asset of the whole system of 
business. 

For the first time labor itself has been capitalised, 
and put on the books of capitalism as part of the com- 
mercial assets of the "nation," considered as a business 
concern; and this obviously only could take place when 
the capitalist class was at least sufficiently uniform and 
united to keep books in common, and had a government 
which the dominant social group, the small capitalists, 
could safely entrust with the control of labor, knowing 
that they would all get their fair share of the benefit of 
such control. Certain progressives have said that their 
movement means the governmental control of capital; 
we here see that it also means the governmental con- 
trol of labor. We may call it, in brief, the nationaliza- 
tion of capital and labor — within the limits set by a gov- 
ernment in control of a small capitalist majority. 

Such a tremendous revolution — the complete reversal 
of the attitude of the ruling part of society toward the 
ruled — must have a very deep cause — still deeper than 
any I have mentioned. This cause is that at last the 
governing classes of society have become sufficiently 
wealthy, highly organized, and efficient to be able to af- 
ford to pay the high wages and to carry out the other 
reforms needed to bring the workers to a high degree 
of efficiency. If it had been attempted, in any country, 
before the revolution brought about by railroads and 
steamships (about 1850- 1875), to treat all labor in a 
way to keep it at a very high level of efficiency, it is 



LABOR AS GOVERNMENT PROPERTY 49 

probable that little would have remained to be divided 
among capitalists in the shape of profits. Now, on the 
contrary, there is so vast a surplus that it cannot find 
investment in new machinery alone. Capitalists already 
look with favor upon government investments which 
means government loans, in projects such as canals, that 
are so large, so complex, and dated so far ahead, that pri- 
vate enterprise could scarcely be entrusted with them. 
And government investments in the improvement of la- 
bor, which require a full generation, that is a completely 
new set of laborers trained from childhood, in order 
to have their full effect, are becoming more and more 
popular. The cost of these investments in labor efficiency 
can be thrown largely on the very wealthy, while their 
benefit accrues to every employer in the country. In poor 
countries, however, just as the most indispensable rail- 
ways and machinery cannot be afforded, so also the cost 
of the most economical or efficient labor is too high and 
beyond reach. 

For these reasons Roosevelt and Wilson and progres- 
sives generally, both in the United States and in other 
countries, are adopting a common policy with regard to 
labor. President Wilson agrees with Ex-President 
Roosevelt that governments must place human rights 
above property rights. Wilson says that "the lives and 
energies of the people are to be physically safe-guarded," 
and Roosevelt proposes to maintain "the life, health, and 
efficiency of the working people. " 

When we consider the immediate programs of Roose- 
velt and Wilson in regard to labor, at first, considerable 
differences appear, but these differences are only super- 
ficial. It is true that Roosevelt favors governmental 
schemes to end "involuntary unemployment," as well as 
minimum wage laws and the fixing of wages paid by 
trusts, while, up to the present, Wilson has opposed 



50 LABOR AS GOVERNMENT PROPERTY 

"plans made by government with regard to employment 
and wages/' 

In dealing with Wilson's attitude on the trust ques- 
tion, however, I have shown that his opposition to gov- 
ernmental regulation of trust prices does not go so far 
as it seems, and the same reasoning will bring us to the 
same conclusion as to his attitude towards the regulation 
of wages. And as we examine his own statements of his 
basic principles we shall see that they lead directly toward 
such regulation. 

President Wilson's Inaugural Address was taken up in 
large part with the labor question. And it will be de- 
cidedly illuminating to gather together and to analyze 
briefly the various sentences and paragraphs that deal 
with this subject. The central and basic proposition is 
a statement of fact: 

"With riches has come inexcusable waste. . . . 
We have been proud of our industrial achievements, but 
we have not hitherto stopped thoughtfully enough to 
count the human cost, the cost of lives snuffed out, of 
energies overtaxed and broken, the fearful physical and 
spiritual cost to the men and women and children upon 
whom the dead weight and burden of it all has fallen 
pitilessly the years through." 

This declaration marks a radical, even a revolutionary, 
advance, coming as it does from the chief executive of 
this country. Our national principle up to the present has 
been "the maximum of material advance that can be 
built up with the minimum of government." But other 
countries have long seen that even material advance is 
menaced by such a principle. Even two of the leading 
members of the British cabinet have seen it for several 
years. Winston Churchill has put forward a whole 
program of social reform, a large part of it now in ef- 
fect, all based, he says, upon the necessity of putting an 



LABOR AS GOVERNMENT PROPERTY 5 1 

end to "the waste of earning-power" that has resulted 
from the ignoring of the human cost in British industry. 
"Poverty" and "economic maladjustment" he declares 
have jeopardized "the stamina, the virtue, safety, and 
honor of the British race." And his collaborator, Lloyd 
George, believes that the poverty which goes so far as 
to decrease industrial efficiency and earning power can 
and will be abolished within a generation. Moreover 
Lloyd George has computed the probable cost of the 
abolition of British poverty as one half the cost of the 
annual increase of armaments. These statesmen have 
also a definite method in view : the further extension of 
recent reforms, of workingmen's insurance, including in- 
surance against unemployment, of minimum wage- 
boards, and of the Development Bill, which aims at the 
prevention of unemployment by undertaking public works 
in hard times. 

This labor policy, new as it is, has captured nearly all 
progressive political parties throughout the world. The 
facts upon which it is based are recognized even by the 
most conservative capitalists and statesmen. The New 
York Sun, for example, says that economic progress is 
due largely to the prevention of waste, that the most 
costly of all wastes is that of the "earning-power of the 
citizen," and that the most important conservation is the 
conservation of "health and working-capacity." 1 

The fact that there is an economic waste of labor and 
that every consideration requires that it should be stopped 
is now almost universally admitted. What then are the 
principles upon which President Wilson proposes to 
act? If we turn to his Inaugural Address again we find 
that his principles are four. The first is the proposition 
that "the laws determining the conditions of labor which 
individuals are powerless to determine for themselves 
are intimate parts of the very business of justice and 



52 LABOR AS GOVERNMENT PROPERTY 

legal efficiency." This is the identical principle adopted 
by Germany in 1883, then by a number of other Conti- 
nental countries, by Australia, and, finally, by Great 
Britain — in 19 10. There is little room to dispute it to- 
day. But, as I shall show later, it leads farther than 
its present partizans imagine. 

The second proposition about these "powerless" classes 
is that "their rights in the struggle for existence" are not 
safe-guarded unless they are "shielded in their lives, 
their very vitality, from the consequences of great indus- 
trial and social processes, which they cannot alter, con- 
trol, or singly cope with." 

The more far-reaching implications of this statement 
also I shall deal with in a later chapter. I only wish to 
point out here that it adds to the so-called "rights of 
man" "the right to have vitality and health protected 
from harm by society or industry." Now we have had 
no French Revolution in this country, and there is no 
menacing or irresistible clamor from below demanding 
any "rights of man." No doubt the President is sincere 
and represents a considerable number of philanthropists, 
academic authorities and reformers in announcing this 
principle. But the effective cause of the new movement 
is certainly not a matter of abstract "right." 

Another related proposition of the Inaugural Ad- 
dress is that "there can be no equality of opportunity 
. . . if men are not shielded" from these same "in- 
dustrial and social processes which they cannot alter, 
control, or singly cope with." 

Equality of opportunity is a well-worn phrase, and 
Wilson would be justified in using it in its older and 
looser sense. That this is the way he usually does use it 
I shall show in a later chapter. If strictly and literally 
employed, however, equality of opportunity (as I shall 
point out) means, not merely the elimination of labor 



LABOR AS GOVERNMENT PROPERTY S3 

waste, but Socialism. And, moreover, when employed, 
as in the present instance, in immediate and explicit con- 
nection with the labor question, it can only mean this real 
equality of opportunity — that is equality of opportunity 
for all, including labor, and not merely equality of op- 
portunity for those having the capital required for 
initiating successful commercial undertakings — or in lieu 
of capital the extremely exceptional ability which alone 
can replace capital in view of the extremely overcrowded 
condition of all commercial occupations to-day. Wilson 
here gives us distinctly to understand that, if men are 
shielded in their "lives" and "vitality," this real equality 
of opportunity will result. Yet, if we search the Presi- 
dent's writings as to how this will come about, we find 
that he restricts his plans looking toward equality of op- 
portunity entirely to the commercial form. 

The real underlying ground for the new policy ap- 
pears only in the following statement: "Society must 
see to it that it does not itself crush or weaken its own 
constituent parts." For the whole progressive movement 
has emanated, not from the oppressed individuals clamor- 
ing for rights and opportunities, but from "society" — 
that is the ruling part of society — not from below but 
from above. 

It is not in any of these statements of his Inaugural, 
however, but in his other declarations as to the relation 
between the classes that we can best see the real reasons 
that underlie Wilson's attitude to labor. For example, 
when he says: "I have never found any man who was 
unjust in regard to the interests of the laboring man," 
and when we recall that he has repeatedly stated that he 
is personally acquainted with many of the magnates of 
the country, and therefore must know their views, this 
is equivalent to saying that he shares their general atti- 
tude on the labor question. And it is in entire accord 



54 LABOR AS GOVERNMENT PROPERTY 

with this statement when, like Roosevelt, he definitely 
declares that such proposals of labor legislation as he 
endorses are largely for the benefit of employers and not 
for the purpose of making social conditions less unequal : 
"To lift up the masses is to help those at the top just as 
much as those on the bottom" (my italics). 

We may take the President's word that this will in- 
deed be the effect of all progressive labor reforms carried 
out, as he proposes, with the approval of employers. 
At the same time, Wilson, like Roosevelt, is very sen- 
sitive to the unpopularity of this proposal to lift those 
at the bottom, since it implies, as he definitely asserted 
in his Inaugural Address, that those at the bottom are 
"powerless" and dependent upon the benevolence of 
those at the top. Similarly Roosevelt says : "We are not 
proposing to go about with the helping hand of those 
who are stronger to lift the weaker, but we are going 
about with the strong hand of government to see that 
nobody imposes upon the weak." Compare these re- 
marks with the very different position taken in his later 
speech, made a few days before the election of 1912 : 
"We propose to lift the burdens from the lowly and the 
weary, from the poor and the oppressed. . . . When 
this purpose can be secured by the collective action of 
our people through their governmental agencies, we pro- 
pose so to secure it. Only by the exercise of 
the government can we exalt the lowly and give heart to 
the humble and the downtrodden." 

Wilson repeatedly asserts that he stands for justice 
and not for benevolence, yet every time he describes the 
position of the ruling class his intellectual honesty is 
sufficient to force him to speak in pure terms of benevo- 
lence, as can be seen from the words I have put in italics 
in the following passages : "The man who regards him- 
self as in a class apart is an enemy to the progress of 



LABOR AS GOVERNMENT PROPERTY 55 

mankind"; "No man's heart is right unless he feels it 
upon the same level as all the other hearts in God's 
world" ; "We mean to try to change men's hearts and 
so direct and modify men's business that they will be 
kind to one another." The emphasis placed by Wilson 
on the right thinking and feeling of the ruling class, 
rather than on diminishing their power, shows clearly 
enough that he knows that he relies upon them and not 
upon the masses. 

The changed attitude to labor is so profound and 
many-sided that it deserves to be dwelt upon. One of 
the ideas that is constantly cropping up is the comparison 
of the workers with machines. Of course they are not 
regarded as mere machines, but as a certain kind of 
machine — to put the matter in one word, human ma- 
chines. The idea is familiar and has been previously 
employed — but only in a purely figurative sense ; the 
workers were said to be something like machines. Now 
they are to be regarded strictly as a part of the machin- 
ery — without forgetting that they are also human beings. 

So President Wilson calls upon employers to give their 
employees at least as much consideration as they do their 
machinery. And it is true that this would mean an 
advance. As Secretary of Commerce Redfield points 
out, the workers have been exploited in a wasteful way, 
like our coal or oil. His proposition that their labor 
power should be conserved at least as well as water or 
timber has now become a commonplace. But the Sec- 
retary of Commerce recognizes that, similar as the prob- 
lem of labor-saving is to that of saving of inert 
material or natural forces, it is even more like the scien- 
tific problem of well-equipped and far-sighted employers 
in saving their machines. He endorses the view of a 
manufacturer that, "when we study the man behind the 
machine as closely as we do the machine, we shall see 



56 LABOR AS GOVERNMENT PROPERTY 

ways of making the one fit the other more closely than 
they do now" 2 (my italics). 

In order to make the two fit together the man must 
be consciously fitted to the machine as well as the ma- 
chine to the man. This means that the same scientific 
exploitation is to be applied to both, and Secretary Red- 
field describes it at length: 

"All about great mills are instruments regulating ma- 
chinery; means are provided that machines shall not be 
overstrained, that their product shall be within their 
power regularly to produce without damage to the ma- 
chine; we ever care lest machines get overheated and, in 
a true sense, lest they get overtired. We know that a 
tired machine gives out, and its life is neither so long as it 
should be nor its product so large nor so good as it ought 
to be. We protect it against dust, we lubricate it, we 
even let it rest, yet that machine is dead, inert. When 
shall we learn that to be most productive a living, respon- 
sive man needs also not to be overstrained, that he needs 
rest, that his product must for economy's sake be al- 
ways within and not beyond his powers?" (My italics.) 

The view that regards the worker as a kind of ma- 
chine is held by the advocates of the so-called "scientific 
management" and of the "efficiency engineers." Its 
basic proposition, as expressed by one of its best known 
promoters, G. F. Taylor, is that, to attain the maximum 
prosperity for the employer and employee, it is neces- 
sary to pay higher wages than are usually paid and to 
bring about "the development of each man to his state 
of maximum efficiency." 3 Undoubtedly, if the maximum 
prosperity of the employer is aimed at, the only way high 
wages can be paid is that the employee shall increase his 
product more than proportionately to the increase of his 
wages. 



LABOR AS GOVERNMENT PROPERTY 5/ 

Taylor, for example, gives the following figures from 
one of his first experiments in the Bethlehem Iron 
Works. As the result of the experiment and to encour- 
age efficiency the wages of a man handling pig-iron 
were increased from $1.15 to $1.85 per day, an increase 
of sixty per cent in a very short period. Taylor explains 
that the man was not overstrained, as it is part of the 
economy of the new method not to wear out the worker 
after so much time and money had been expended in 
training him. Similar increases were made under sim- 
ilar conditions in other employments — and cannot fail 
to be welcomed by the individual worker (if we lay 
aside for later consideration their effect on labor organi- 
zations). Such handsome increases of wages and the 
greater care of the worker's health that is also a part of 
the new method are indeed a revolution for the employee 
as well as the employer. But let us turn to the employers' 
gain. The output of the worker just mentioned, the 
amount of pig-iron handled, was increased from i2*/2 to 
47^ tons per day. The cost of handling a ton decreased 
from 9.2 cents to 2.6 cents. This is indeed an example 
of Senator La Follette's principle, and that of the new 
movement generally, that labor is to be paid more but 
is to cost less. The pay in this instance was raised by 60 
per cent while the cost of labor fell 354 per cent. And, 
as Taylor shows that increases of output under his sys- 
tem commonly amount to from 100 to 300 per cent, we 
have here a fair measure of the new policy. Taylor 
claims that part of the gain is passed along to the con- 
sumer in lower prices, but certainly this will not be the 
case with a semi-monopolized business like the steel- 
making of the Bethlehem Iron Works. And even where 
there is competition it may be questioned as to whether 
the ultimate consumer will get much of these enormous 
gains. For competition among the workers is likely to 



58 LABOR AS GOVERNMENT PROPERTY 

pull down the worker's gain of 60 per cent far more 
rapidly than competition among employers pulls down 
the employer's gain of 354 per cent. Both of these 
tendencies will lead to lower prices, either directly — 
where there is competition, or through govern- 
mental pressure — where there is a practical monopoly. 
But given the original large gain to capital, and 
the disparity between this and labor's original gain, 
and it seems safe to expect that the final result will 
be that capital will have gained far more than 
labor. 

Now let us look a little more closely at the attitude 
of the efficiency engineer to the man in the workshop. 
For, whatever their final effect on wages and profits, 
scientific management, efficiency wages, and efficiency so- 
cial reforms certainly mean a permanent and revolution- 
ary change in industrial organization and discipline. Tay- 
lor points out that the new system is the opposite of the 
old methods of employers to increase output. It does 
not aim to encourage "initiative and incentive" in the 
mass of the workers. These traits are invaluable in em- 
ployers, and also in the considerable proportion of the 
working force that, under the new system, is allotted to 
studying the laborer and planning and directing his work, 
a proportion that sometimes rises to 20 per cent. But 
incentive and initiative, and therefore reward and pun- 
ishment, are undeniably out of place even for the most 
human of "human machines." Everything may be con- 
sidered for its effect on the welfare of these peculiar 
machines, from the cooking of their breakfasts to their 
recreation the evening before, but their sole duty is to 
obey their scientific managers, and not to supply in- 
itiative, i.e. brains. It is recognized by Taylor that this 
means a modernized military discipline in industry. And 
military discipline is not too hard a name. For military 



LABOR AS GOVERNMENT PROPERTY 59 

service is also being revolutionized. The modern soldier 
is still supposed to have no mind or will of his own, 
but his needs, physical, mental, and moral, are more and 
more scientifically looked after — even to providing 
amusements and candy or sweetmeats to stimulate his 
digestion. And the Taylor system is similarly humane. 
So many seconds of rest are provided between tasks, 
with a stop-watch in the hand of the scientific manager, 
for this increases the output. Taylor also calculates that 
the employer of female labor would gain by giving each 
of his girls two consecutive days of rest at a certain 
time each month. 

But look what a complete reversal this is of the time- 
worn method of handling labor. Under the system of 
chattel slavery, fear of the whip was the motive held 
over the workers' heads. Under the wage system up to 
the present, the motive has been the fear of losing the 
job and of starvation on the one side, and the reward of 
a better position, or somewhat higher wages, on the other. 
Now the worker will need neither to worry about increas- 
ing his output, as the efficiency engineer has already 
brought it to a maximum, nor to fear that he will lose his 
job, for the employer has already invested a considerable 
sum in training him, and will not readily let him go. The 
work is divided up into a thousand tasks, moreover, and 
something will be found for every order of ability. The 
worker, then, does not have to choose his task, he only 
has to obey and the task at which he can earn most is 
chosen for him. He does not have to speed up his work, 
as he has up to the present, he only has to obey and make 
such motions and as many motions a minute as he is 
directed to make. He does not have to worry about his 
reward, for he will be paid all that is needed to keep 
him efficient, no less and no more. In a word, he has 
only to obey and he will be promoted to more difficult 



60 LABOR AS GOVERNMENT PROPERTY 

tasks, and his wages increased as fast as he shows the 
ability to make more for his employer. 

Evidently if the working people are regarded as 
wealth-producing machines it pays to care for them, as 
being very expensive, though perhaps not the most ex- 
pensive, machinery. Lloyd George uses this argument 
in support of his labor reforms. It is true that he also 
uses other arguments somewhat more radical, but this is 
the one no doubt that has given him the support of such 
a considerable proportion of British wealth, so that he 
is even able to boast that the larger part of the 
wealthy members are on his side in Parliament. He 
points out that, though Public Health and Education acts 
have cost much money, "they have made infinitely more" 
and that this is true of all laws which "improve the con- 
dition of the people." 

"These have all contributed towards the efficiency of 
the people even as wealth-producing machines," he con- 
tinues. "An educated, well-fed, well-clothed, well- 
housed people invariably leads to the growth of a numer- 
ous well-to-do class." 4 

When the industrial statesman begins to specify the 
concrete things which it pays to do for the worker, such 
as feeding him properly, instead of dwelling merely on 
the financial aspects of the problem, a figure of speech 
still better than the comparison with machinery immedi- 
ately presents itself. For working animals and farm ani- 
mals, horses, cattle, etc., must be well fed if the maxi- 
mum profits are to be obtained from them, and if they 
are at all valuable, their health, rest, and even their com- 
fort must be provided for. So Secretary Redfield re- 
minds us that we take great care of race horses because 
success depends on "their health and their ability to en- 
dure strain," points out that the same is true of men 
in the race of modern commerce, and that "the interests 



LABOR AS GOVERNMENT PROPERTY 6 1 

at stake are such as to make it vital that the human factor 
in our industries shall be fit." 5 

Secretary Redfield relates a case in which one Ameri- 
can carpenter did the work of four Frenchmen, and at- 
tributes this superiority to the extremely light eating of 
the Frenchmen (bread and butter and coffee for break- 
fast and a little bread and wine for lunch) when com- 
pared with the American's three square meals a day. 
And he remarks that, if a workman "enters the works 
scantily fed or having eaten ill-cooked food, he can hardly 
work with the same energy as the man whose wife has 
provided him with a good breakfast." 6 Similarly it 
makes a difference in the financial results in a mill 
"whether among a thousand men one hundred or three 
hundred or more are out of health." Even mental health 
has its value and "the mechanic with a sound body and 
skilled hands will be worth much more to himself and 
others if he has also a trained mind." 7 

According to Taylor, two classes of scientific ex- 
periments have been made ; one by physiologists who are 
studying the endurance of the human animal, the other 
by engineers who wished to study "what fraction of a 
horse power a man power was." 8 Those who compare 
the worker to a machine are thinking rather of the 
second phase of the question, those that compare him 
to a working animal are thinking rather of the first (see 
below). 

After thus inquiring into the methods of getting the 
most work out of a man, the next question for the scien- 
tific employer is to produce the man who will produce 
the most work. Not only are the man and his labor power 
to be conserved and scientifically managed, but he is to 
be trained and made amenable to training — a good deal 
as a horse is. "Bad air, bad light, overcrowding, dirty 
and unsanitary conditions, — are all marks of inefficiency 



62 LABOR AS GOVERNMENT PROPERTY 

in the management." The correction of these evils is 
"the mere commonplace of efficiency without which the 
accomplishment of pre-determined tasks cannot be ex- 
pected." 9 Efficiency, besides scientific training, requires 
that the human working animal be kept from fatigue. 
Not only must the tasks not be too heavy or at too high 
a speed, not only must rest be provided for at weekly, 
daily, and at shorter intervals, but everything that is too 
deleterious to human well-being must be removed. For, 
even if the worker is still able to continue at his task, and 
to perform as much work as before, fatigue accumulates 
from day to day, and counts against him and his em- 
ployer in the end. Not only does fatigue consume the 
energy-producing substances of the body, often beyond 
ready repair, but waste matters and actual poisons accu- 
mulate, to say nothing of other results such as extremely 
serious nervous fatigue and derangements. 

Then, as working animals, employees must reproduce 
their kind, and poor food, long hours, overstrain, un- 
healthy conditions, and lack of sleep are particularly 
serious in their effects on female functions. Nervous dis- 
orders, a predisposition to disease, a low birth rate, in- 
fant mortality and race degeneration are an inevitable 
result. 

The comparison of working men with animals has be- 
come quite common in the literature of the progressive 
movement and if we recall what a wonderful improve- 
ment has taken place in the treatment of farm animals 
since the rise in their value and the introduction of scien- 
tific methods (which is at once the cause and the effect 
of this rise), we must admit that the comparison — from 
the standpoint of the economic interests of those who 
make it — is most apt. The Commissioner of Labor of 
Rhode Island, George H. Webb, wonders that employers 
have not previously applied the same principles to men as 



LABOR AS GOVERNMENT PROPERTY 6$ 

they have for centuries to horses. Webb begins his re- 
port on Welfare Work by assuring the manufacturers 
that it is profitable. He says : 

"Mankind, at least that portion of it that has to do 
with horseflesh, discovered ages ago that a horse does 
the best service when it is well-fed, well-stabled, and 
well-groomed. The same principle applies to the other 
brands of farm stock. They one and all yield the best 
results, when their health and comfort are best looked 
after. It is strange, though these truths have been a 
matter of general knowledge for centuries, that it is only 
quite recently that it has been discovered that the same 
rule is applicable to the human race. We are just begin- 
ning to learn that the employer who gives steady employ- 
ment, pays fair wages, and pays close attention to the 
physical health and comfort of his employees gets the 
best results from their labor." 

H. L. Brown, Chairman of the Massachusetts Mini- 
mum Wage Board, uses a similar argument for a mini- 
mum wage: 

"The situation . . . encourages the 'scab' employer, 
who cares for nothing except profits, to continue to run 
his business on the system by which he does not treat his 
girls as well as his horse. By no means other than in- 
vestigation . . . can the fair employer be protected from 
the unfair competition of the unscrupulous." 

These gentlemen do not realize that it has paid the 
owners of animals in the past, as it pays the employers 
to-day, to make such expenditures only in proportion 
as men and horses reach a considerable value, nor do 
they see that this point has been reached for the mass of 
animals only recently and is just being reached for the 
mass of men to-day. 

We have the most powerful official presiding over a 



64 LABOR AS GOVERNMENT PROPERTY 

Wage-Court in the world, Justice Higgins of Australia, 
using the same human animal argument and making it 
the very basis of his decision of a celebrated case that 
fixed the minimum wage in that country for several 
years : 

"If A lets B have the use of his horses, on the terms 
that he gives them fair and reasonable treatment, I have 
no doubt that it is B's duty to give them proper food 
(sic) and water, and such shelter and rest as they need; 
and, as wages are the means of obtaining commodities, 
surely the State, in stipulating for fair and reasonable 
remuneration for the employees, means that the wages 
shall be sufficient to provide these things, and clothing, 
and a condition of frugal comfort estimated by current 
human standards. This, then, is the primary test, the 
test that I shall apply in ascertaining the minimum wage 
that can be treated as 'fair and reasonable' in the case of 
the unskilled laborers." 10 

The Justice decided on this basis that "the necessary 
average expenditure for a laborer's home of about five 
persons was 32 shillings and 5 pence (about $8.00) a 
week." 

"These figures, however, covered only 'rent, groceries, 
bread, meat, milk, fuel, vegetables, and fruit.' They did 
not cover, said the court, 'light, clothes, boots, furniture, 
utensils, rates (taxes), life insurance, savings, accident 
or benefit societies, loss of employment, union pay, books 
and newspapers, train and tram fares, sewing machine, 
mangle, school requisites, amusements and holidays, in- 
toxicating liquors, tobacco, sickness and death, domestic 
help, or any expenditure for unusual contingencies, relig- 
ion or charity.' " 

The Justice added 9 shillings and yd. per week ($2.32) 
to cover these additional requirements, which are mostly 



LABOR AS GOVERNMENT PROPERTY 65 

indispensable if the laborer is to be kept in any degree of 
efficiency. Even this total wage of less than 42 shillings 
the Justice evidently felt to be rather too high for human 
work-animals, for in spite of the rapid and continuous 
rise in the cost of living, proved and admitted before 
his court, he allowed it to stand unchanged for years. 
It may be seen from this how far the employer's standard 
of what the worker needs for the purposes of profits is 
from any truly scientific standard, either (1) of what he 
and his family need for their full development, or (2) 
of what industrial efficiency would require, if employers 
were also put on a basis of the minimum of profits needed 
to keep them in efficiency — payment for interest, risk, 
and wages of superintendence — and if inefficient em- 
ployers who could not thrive on such a basis were allowed 
to go into bankruptcy. 

Let me take up first the scientific standard of what is 
required for personal and family development. The cost 
of living has been found by a number of authorities, 
American and Australian, including the Australian wage- 
courts, to be very similar in the two countries. Scott 
Nearing, summing up several American investigations, 
concludes that from $600 to $900 per annum is required 
to maintain a normal standard of living for a family of 
five — "so far as the physical man is concerned" — quoting 
the language of R. C. Chapin's well-known report. 
The figure varies chiefly according to the size of the city 
and the section of the country. It means from $10.00 to 
$15.00 a week as a minimum, provided there is steady 
employment. But employment for unskilled labor is 
notoriously unsteady. Even if we allowed only ten per 
cent for this, the minimum for the period when these of- 
ficial studies were made (1909-1911) would be from 
$11.00, in rural districts only, to $16.50 in the largest 
cities. Yet it was at this time that Justice Higgins fixed 



66 LABOR AS GOVERNMENT PROPERTY 

the minimum at $10.20 and applied this to all Australia! 
Within the last few years, it is claimed that the Aus- 
tralian courts have raised wages faster than the cost 
of living in certain occupations. But these are the fav- 
ored trades and industries that control the Labour Party 
and thus, indirectly, to some degree at least, influence 
the courts. This is indeed one of the best evidences that 
the aristocracy of labor advances itself at the expense of 
the laboring masses and will do so more and more as it 
comes into power. But this question forms the subject 
of later chapters (XII and XIII). 

Under the new dispensation — scientific management 
and scientific labor laws — labor is viewed as a natural 
resource, a part of the machinery of production, the la- 
borers as human working animals, that is as a part of 
the system of production that must itself be produced. 
We are prepared then to hear progressives like Senator 
Beveridge, Chairman of the National Progressive Con- 
vention, say that labor is no longer to be regarded as a 
mere commodity, as it has been up to the present : 

"Progressives insist on making our laws from the 
human point of view rather than from the purely com- 
mercial point of view. The Progressive Party rejects 
the savage economic doctrine of the obsolete Manchester 
School that labor is nothing but a commodity, to be 
bought at the lowest possible price, used until efficiency 
is exhausted, like a shovel, or a machine, or a bucket of 
coal, or a bushel of wheat." 11 

The progressives propose that, with every considerable 
increase of wages or other sums expended for the benefit 
of labor, there shall be a more than corresponding in- 
crease of efficiency, output, and profits. And every con- 
siderable increase of wages and profits of this character 
will undoubtedly prove a great blessing to all humanity. 



LABOR AS GOVERNMENT PROPERTY 6j 

But employers — as a class — are financially interested 
in having the labor reform movement stop at this point. 
The further increase of wages, which would be at the 
expense of profits, does not attract them. They want to 
increase the national wealth and — to some degree — to 
increase everybody's income. They do not want at the 
same time to bring about a fairer distribution of this in- 
creased national wealth and income. 

In the article just quoted Beveridge says : 
"We think it a great deal more important that men 
and women engaged in any industry should not have 
their health destroyed than it is that the manufacturer 
should make abnormal dividends'' (my italics). In 
Roosevelt's remark that "wages should increase as well 
as dividends" we see the same point of view. Yet in the 
very same article, in discussing the protective tariff, 
Beveridge says that the Progressives are "at relentless 
war with the present day Republican doctrine of a 
guaranty of profit to manufacturers" and that it would 
be just as sensible to guarantee a profit to farmers, 
and barbers, and doctors, and lawyers. If a manufac- 
turer cannot make any profits under a reasonable tariff, 
says Beveridge, then he must do without profits, as a 
reasonably low tariff is more important than his divi- 
dends. But the Progressive leaders do not apply this 
principle of survival of the fittest against employers who 
are not efficient enough to be able to pay reasonable 
wages. Wages must not be increased at the expense of 
any dividends, and the health of the laborer, according 
to the Progressives, is not more important than profits 
by any means, and is to be preferred only to abnormal 
profits. 

We cannot pay much attention then to the occasional 
claims that the new labor policy is based on sheer al- 
truism, even when these claims descend from on high, 



68 LABOR AS GOVERNMENT PROPERTY 

from a Roosevelt, a Wilson, a Churchill, or a Lloyd 
George. Nor are such claims very persistently made or 
insisted upon. On the contrary, the argument is for 
the most part — in direct contradiction to this — intensely 
realistic and matter of fact. As I have pointed out, the 
employer is nearly always to be duly benefited. And 
when altruism is dwelt upon it is only with the greatest 
vacillations and contradictions. A typical case is that of 
Secretary of Commerce Redfield in his book I have al- 
ready quoted — "Our New Industrial Day." After a 
full statement of the new labor policy and its solid and 
interested financial grounds, he reverts to the doctrine 
that its basis is altruism, but finally asserts that it is both 
altruistic and interested — which is a sufficient avowal 
that the effective motive is, after all, financial. 

First let us note Redfield's clear-eyed recognition of 
the reality: 

"The normal resistance of a working force to pressure 
under conditions of a narrow wage and long hours is not 
an element that leads to continued profit. No manage- 
ment is scientific or permanently possible which does 
these things. For evidently many employers have done 
them and still do them — at the expense of other em- 
ployers." 

Yet on the next page Redfield naively refers to a 
scientifically managed enterprise which was regarded by 
its owners "as a social experiment" that "they were 
happy to find lucrative." May we not on the contrary be 
confident that at the bottom it was a primarily lucrative 
experiment which "they were happy to find" they could 
also make into a social experiment? This is a mere 
change of emphasis, but in the study of motives a change 
of emphasis often makes all the difference in the world. 

Our Secretary of Commerce proceeds to tell us that the 
adoption of the new labor policy shows that "profits are 



LABOR AS GOVERNMENT PROPERTY 0() 

no longer the supreme law," whereas it would seem to 
demonstrate the exact reverse. And, a few pages later, 
he himself concedes that the motive is not exclusively 
humanity, but also "care for our profit's sake." Other 
admissions go still farther, until finally this confession 
is made: 'This (labor policy) is not an appeal to one's 
sympathy or sentiment. In our use of human forces 
we must study those forces as we study others, learn the 
facts and adapt ourselves to them." 12 "The present 
trend towards saving effort and keeping the human mech- 
anism in our factories in good working order does not 
arise from altruistic motives but from economic ones" 
(my italics). 13 

I have dwelt at some length upon the general principles 
on which the new labor policy is based. I shall now 
very briefly outline the chief elements of its concrete 
program. One of its first cares is that enough children 
shall be born. Napoleon was perhaps the last great ruler 
who demanded more births in order that there should be 
food for cannons, though a minority still raises the same 
cry in France to-day. But there is now an insistent de- 
mand for more workingmen as food for factories, and 
births are encouraged from many quarters on this eco- 
nomic ground. There is another and surer way, however, 
of increasing the supply of labor at its original source. 
To the demand for more children, mothers may reply 
that quantity interferes with quality, both in obtaining 
well-born children and in raising them. On the other 
hand, in the movement to check the tremendous losses 
of life and health among very young children, especially 
in very large families, mothers are the most ardent 
workers. 

The ultimate value to industry and employers of the 
children born every year is enormous. And if the pro- 
portion of deaths or invalidity can be materially decreased 



70 LABOR AS GOVERNMENT PROPERTY 

there must be a correspondingly large gain. We have 
seen the worker compared in value to raw material, to 
machines and to animals. Professor Irving Fisher makes 
another calculation (with perfect correctness, from the 
employer's point of view) and shows us the financial 
value of the child crop. 

Mothers will be surprised to learn that the child crop, 
valuable as it is, is scarcely as valuable as the animal and 
plant crop (horses, cattle, sheep, pigs, corn, wheat, hay, 
cotton and other agricultural products) — to say nothing 
of the even higher value of the annual product of our 
manufactures and mines. When the product of our 
agriculture was worth over 9,000 millions the annual 
baby crop was worth 7,000 millions — according to 
Fisher. He also calculates that 47 per cent of the chil- 
dren who die at less than five years could be saved at a 
cost of $20 per child. This would yield a handsome 
profit to industry and employers of $576,000,000 a year. 
We may assume surely that a somewhat larger percentage 
could be saved by a far greater expenditure, certainly 
if this expenditure were made large enough and extended 
over a considerable period. For example, surely $1,000 
per child instead of $20 would save 57 or 67 per cent of 
the children instead of 47 per cent. But this last 10 or 
20 per cent at this rate would probably cost too high and 
"industry" would show a loss instead of a gain on the 
lives of these children. The conclusion is that "industry" 
will let the babies die and save the $1,000 per capita or 
whatever sum would be needed to save them. 

So we see that, at the present rates of expenditure, 
there are solid commercial reasons behind the mothers' 
pension laws that are being enacted "for the children's 
sake" in the various states of this country. For these 
pensions must mean a very considerable saving of life 
and vitality, since they are given to the very poorest fam- 



LABOR AS GOVERNMENT PROPERTY Jl 

ilies, those of dependent mothers, where the death rate 
of infants is often several times that among the more 
prosperous. As these pensions, already enacted in seven- 
teen states, after little more than four years of agita- 
tion, vary from $8.00 to $15.00 a month for the first 
child and from $5.00 to $12.00 for later children they are 
already a substantial aid, and may be raised and extended 
later — for example, so as to make it possible that chil- 
dren shall be kept from work until 16 or 18. New Jer- 
sey, Michigan, and Oregon have already reached this 
lower point, while Illinois extends the pension to mothers 
of boys to 17 and girls up to 18. This will enable chil- 
dren to take advantage of the new vocational schools now 
being publicly established through the employer's influ- 
ence (see Chapter V). But these pensions cannot be 
raised very much farther and still show a profit to em- 
ployers. At $10.00 a month a sixteen year old girl raised 
under this system would have cost the state nearly $2,000, 
and it may be doubted if the life of the female child is 
worth more — to the employer. And surely the life of 
this child would not be worth more to the employers than 
the $3,000 that the child would cost under the $15.00 a 
month of the Ohio law. 

But it would mean a vast advance over conditions of 
the past even if the sixteen year old working-class girl 
were valued by an employer's government only at $3,000 
and the boy say at $6,000, even if public expenditures on 
them were limited to some such amount. Not only would 
mothers' pensions become more general and more liberal 
than at present, but every reform that affected the home 
would be promoted for the same reasons : workingmen's 
insurance, model dwellings, etc. The child would be 
given free lunches and other support in the school — and 
billions would be expended on vocational training, which 
might double his value to employers and also enormously 



72 LABOR AS GOVERNMENT PROPERTY 

increase all the other profits to be made from all the 
other investments for saving the life and health of the la- 
borer that I have mentioned. And the incidental bene- 
fits of such reforms to labor are too great to be summed 
up in a few words. Even though, after the balance was 
cast up, the employers were getting a greater propor- 
tion of the nation's wealth than ever, they would mean 
a new life and a new world for the worker. 

President Roosevelt's Conservation Commission esti- 
mated that "human beings considered as capitalised 
working-power are worth three to five times all our other 
capital, and that, on a very moderate estimate, the total 
waste and unnecessary loss of our national vitality 
amounts to one and one-half billion dollars per year." 14 

If "human beings considered as capitalized working- 
power are worth from three to five times all our other 
capital/' then it is economic from the employer's stand- 
point to expend from three to five times more in mak- 
ing, for example, a ioo per cent saving of human beings 
than in making a ioo per cent saving of machinery 
or other capital. The billion and a half is indeed a very 
moderate estimate of the sheer waste through death, 
disease, and accident — to which the Roosevelt Commis- 
sion confined itself. Unemployment and the overstrain 
of too long hours, which were not considered, probably 
account for a still greater loss. But besides stopping 
these losses certain positive gains are possible with bet- 
ter wages and better food (namely, greater strength and 
intelligence) and with better training in the school and 
factory. If several billions are expended annually on 
railroad extensions, canals, roads, buildings and farm 
improvements, new factories and machinery — then ac- 
cording to the irrefutable logic of the Roosevelt Com- 
mission it would pay to expend two or three times this 
amount on labor. 



LABOR AS GOVERNMENT PROPERTY 7$ 

One of the first expenditures after those on mothers 
and children will be for social or workingmen's insur- 
ance against sickness and accident. Public expenditure 
for sanitary measures, hospitals, and model dwellings 
is also increasing rapidly, but this increase will be far 
more rapid after governmental insurance has been de- 
veloped. It will then be a part of the regular business 
of government, and a matter of immediate saving to the 
government itself, to check the too-long hours that lead 
to premature old age and invalidity, to prevent acci- 
dents, and to lessen disease. In 1909 the German gov- 
ernment's expenditures for the insured were $167,000,- 
000 and now $100,000,000 is to be added for public and 
private servants. It is no wonder then that the German 
government tends to invest a large part of the capital 
of this fund in model dwellings for workingmen, or that 
many millions more are loaned to cities for hospitals 
and sanitariums. "It was found that tuberculosis was 
responsible for 15 per cent of the allowance to males and 
this led to a war against it." In 1909 nearly $4,000,000 
was spent to fight this scourge. But if any considerable 
part of the patients are cured this will prove a profitable 
investment for the government — to say nothing of the 
gain to employer and employee. And as the death rate 
from tuberculosis was cut down twenty per cent in ten 
years, largely through the government's efforts, even 
before these larger expenditures were undertaken, this 
profit is almost certain. No wonder then that German 
employers expressed their unanimous approval of this 
insurance to Lloyd George, while a recent German Min- 
ister of the Interior explained the efficiency of the Ger- 
man worker (i. e., the large profits made from his labor) 
as largely due to this social legislation. 15 

The expenditures of modern cities for the benefit of 
the workers, especially in Germany, are based largely 



74 LABOR AS GOVERNMENT PROPERTY 

upon the same principles. "The German city looks upon 
happiness as a public obligation," says Howe. "It fresh- 
ens the artizan and relieves the dull monotony of his 
daily work." Cologne, for example, expends $1.50 per 
capita for the theatre, music, art, science, public baths 
and parks. 16 Howe gives another explanation of this 
expenditure that is even more illuminating: 

"The efficiency of the German worker is in no small 
degree due to the rest, to the change in environment and 
in mental interests which the community offers in these 
ways. There is little drunkenness and few of the en- 
vironing allurements leading to excess which characterize 
the commercialized recreational opportunities in Ameri- 
can cities." Redfield speaks of the enormous losses to 
British industry due to drinking and blue Mondays alone. 
And as the government of German cities consists almost 
exclusively of business men we cannot doubt that it is 
this and similar considerations that govern them (see 
above, Chapter II). 

Similarly the insurance against unemployment and 
plans for its prevention are confessedly dictated in large 
part by the view that the unemployed are an unnecessary 
charge on taxpayers and can be set to work by the gov- 
ernment to its profit or to the profit of those who control 
it. So a dozen of the largest German cities grant sub- 
sidies to unions, savings banks, and other voluntary 
associations in order to relieve the unemployed, while the 
German governments make appropriations for public 
works over a number of years and carry them on in 
times of depression in order to provide employment. As 
wages are lower at such times than at others, this is ob- 
viously even more of a gain to the governments (and 
those who control them) than it is to labor — which, 
though employed, must accept a very low wage. 

The British legislation of 19 10 has gone farthest in 



LABOR AS GOVERNMENT PROPERTY 75 

both methods of meeting unemployment. Winston 
Churchill's Development Bill for re-forestation and other 
public works was proposed largely for the express pur- 
pose of furnishing work in times of unemployment, while 
his insurance against unemployment is the first example 
of a thorough law of this kind on a national scale. The 
law at present applies to certain trades only but it insures 
2,400,000 people, and the government contributes one- 
third of the total amount, the rest being paid by em- 
ployees. If we consider the vast amount of unemploy- 
ment we can see what a problem it affords. For un- 
skilled labor this problem may be solved along the lines 
of the Development Bill. And for the skilled, the high 
cost of insurance to the government will doubtless lead 
to a solution, though this expenditure is by no means 
to be reckoned as a dead loss from the employer's stand- 
point. Indeed it subsidizes certain industries by making 
them more attractive to employees, and it will even have 
the tendency to make such employees accept somewhat 
lower wages. 

In the United States we find insurance against unem- 
ployment proposed in the New York State platform of 
the Progressive Party together with insurance against 
sickness and old age. And we find in the National plat- 
form of the same Party, the prevention of involuntary 
unemployment. And since unemployment, even in good 
times, probably means $500,000,000 a year lost to em- 
ployers, we can see very practical reasons for the pro- 
posals. For it has been calculated by an able statistician 
that the United States loses annually in this way 1,300,- 
000 years of labor time. If we allot 300,000 of this to 
"unemployables" and value a labor-year, conservatively, 
as worth $500 to the employer, we see the loss cannot 
be far from my estimate. 17 

The eight-hour day is also advocated by progressives 



j6 LABOR AS GOVERNMENT PROPERTY 

and radicals because of the value of the employee's rest 
and recreation to the employer. Churchill and Roosevelt 
favor it, while Secretary Redfield notes that, just as the 
nine-hour day, once generally opposed by employers, is 
now widely held to pay, so the eight-hour day will in 
most instances be found more profitable than the day of 
nine hours. The gravest and most costly effect of the 
longer day is not in lessening the output of the later 
working hours nor in deterioration of the work the next 
day, but in the gradual deterioration of the work through- 
out the years and in the worker's premature and costly 
superannuation. So, Ex-Senator Beveridge has declared, 
in the name of the Progressives : 

"We think that the industrial order, which, notwith- 
standing the enormously increased productivity of ma- 
chinery, nevertheless drives human beings to such hard 
and excessive hours of labor that their usefulness is 
sucked out of them by middle life, is utterly wrong; and 
so, under the head of industrial and social justice, the 
Progressive Party platform proposes a program of com- 
prehensive, systematic and practical reforms to carry out 
this third great principle on which our party is found- 
ed." 18 

Such an industrial system as the present one, whether 
right or wrong, is evidently wasteful and unprofitable 
for the employing class generally, except only for such 
relatively inefficient employers as are forced by financial 
necessity to sacrifice the future of their employees for 
immediate results — at the expense of employers as a 
class. 

As Senator La Follette says : "All practical experi- 
ence shows that shorter hours mean better health and 
higher efficiency of employees, the quality of the work 
and the character of the output more than offsetting any 



LABOR AS GOVERNMENT PROPERTY JJ 

loss from cutting down the working hours of the day." 
If we measure the losses from long hours, not by the 
day but by the worker's life-time, our industrial states- 
men are surely right. Not only will the employer not 
lose by the shorter hours, but as with all the other labor 
reforms now under discussion, he will undoubtedly gain. 

Roosevelt declares, in his Century article : "We be- 
lieve in shortening the labor day to the point that will 
tell most for the laborer's efficiency both as wage worker 
and as citizen." This is a briefer and clearer formula- 
tion of the basis of the Progressive labor policy than his 
statements of wage policy. It indicates the general atti- 
tude of Progressives towards labor, including wages and 
other conditions. There are to be no real concessions, 
no improvement at the expense of profits. Everything 
that is to be done for labor is either to pay for itself or 
to bring in profits greater than its cost. 

Again Jane Addams, the most eminent woman Pro- 
gressive and a member of the Party's Executive Commit- 
tee, advises the Garment Manufacturers : 

"If you men pay better wages, you will get a better 
type of girl worker, and I can tell you that as soon as 
wages go up the efficiency of your plants will be in- 
creased. Make the girls know that increased skill means 
increased wages, and you will solve your labor problem." 

Such improvements in labor conditions as will increase 
profits — this is undoubtedly the progressives' solution 
of the labor problem — whether these progressives are 
of the Progressive, Democratic, or Republican Parties, 
American, British or Australian. 

And whether the question is one of the governmental 
policy about wages or of the governmental policy about 
social reforms, the same motive lies at the bottom. Thus 
at the time of the British Railway Strike of 191 1 the 
Chancellor of the Exchequer, Lloyd George (in the 



?& LABOR AS GOVERNMENT PROPERTY 

House of Commons), gave the following explanation of 
the Government's basis of settlement, by which it prom- 
ised the railways to allow them to raise their rates, in 
return for their agreement to increase wages : 

"We are simply giving the railway companies a right 
which is now extended to every business man in the 
country. ... If there is a great settlement between 
colliery owners and their employees, or great cotton spin- 
ners, or in any other industry, which involves a heavy 
increase in the labor bill, they pass it on, and they are 
entitled to pass it on/' 

In defending his Insurance Law before a deputation 
from the Employers' Parliamentary Council and the As- 
sociation of Chambers of Commerce, Lloyd George 
showed that the same motive was behind this great so- 
cial reform policy. In no event are profits to suffer. 
The whole governmental policy is frankly an employer's 
policy. Higher wages are to be paid for, at first, by 
higher prices. And if there is any increase of real wages 
(i. e. an increase of money wages beyond the rise in the 
cost of living), the workingmen are to pay for it, or 
more than pay for it, by rendering the employers an in- 
creased output. Here are the Chancellor's very words : 

"I am not complaining, if I had a right to, that the 
employers are hesitating and wondering whether they are 
going to get their money's worth, but I think if you take 
the trouble to send a deputation to Germany to men en- 
gaged in the same trades you would come back with a 
conviction that in the long run it would be better for you. 
Now comes Mr. Shepherd, and says it falls on the con- 
sumer. Of course it will have to fall on the consumer, 
except to the extent that it is absorbed in improved effi- 
ciency. What is not absorbed in improved efficiency 
must fall on the consumer. Take a builder. I had to 
build a small cottage down in Wales a short time ago. 



LABOR AS GOVERNMENT PROPERTY 79 

If I were to build this cottage after this Bill came into 
operation the contractor would put down the wages he 
would have to pay, and I have no doubt in reckoning 
up, in sending in his tender, he would in future take into 
account the amount he would pay under the insurance, 
and he would put that in his estimate before he sent in 
his tender. But every other builder in the town would 
have to do the same thing. If charged upon one builder 
and not upon another, it would be unfair, but seeing that 
every builder in the neighborhood would do the same 
thing, that would fall upon me as a consumer in the first 
instance, but I believe in the long run it will be absorbed 
in the increased efficiency of the worker, and that neither 
I nor the builder would pay it, and that we both benefit 
by it." 19 (My italics.) 

So we see that the progressives' attitude towards labor 
is the same as their attitude towards industry. Profits 
require efficiency, and efficiency requires what practically 
amounts to government ownership of labor. [See Chap- 
ter VI] 



CHAPTER IV 

THE NEW DIVISION OF THE NATION'S INCOME 

All the reforms of State Capitalism may be carried 
out without making the distribution of the nation's in- 
come among the various social classes any more equitable 
than it is to-day. The present tendency, according to 
which a larger part of the annual product of our labors 
goes each year to those who live largely or wholly by 
rent, interest, and profits, while a smaller part goes 
to those who live by wages, may thus be indefinitely 
continued. Government ownership or control of in- 
dustry may be further and further extended, taxes may 
be more and more steeply graduated against the wealthy, 
and all the proposed labor reforms may be put in force, 
and still the present tendency may persist and the dis- 
tribution of income may become more and more unequal 
year by year. All classes will receive some part of the 
benefit of the new policies, but the receivers of rent, in- 
terest and profits may continue, as at present, to better 
their position, year after year, more rapidly than the 
rest of the population. And this can only mean that the 
gulf between the classes will continue to grow wider — 
unless, indeed, a sufficiently large number of individuals 
pass from one class to the other — a possibility I shall dis- 
cuss in the following chapter. And even if such a 
counter-tendency did prevail it could only mean that a 
larger and larger proportion of the nation's wealth was 
passing into the hands of a minority — if a growing one. 

80 



THE NEW DIVISION OF THE NATION^ INCOME 8l 

A grossly unequal distribution of wealth, such as now 
prevails, has always been condemned by democratic 
statesmen as endangering the very basis of democracy. 
If then our problem is not merely to maintain democ- 
racy but to secure democratic progress, this question is 
all the more crucial. Jefferson and Lincoln based all 
their hope for America on the supposition that the small 
capitalists, doing their own work, or perhaps working 
for others until middle age, and then setting up in farm- 
ing or business for themselves and, finally, employing 
one or two helpers, would control the wealth of the 
country. President Wilson, in the passages already 
quoted, and also in referring to the $2,500 a year man as 
the decisive element in politics, suggests the same view. 

What then if those receiving smaller incomes than 
this, though gradually improving their condition, can 
be shown to be getting year by year a smaller and smaller 
proportion of the nation's income, and if it can be shown 
further that not even the most radical of the reforms 
now being introduced promise to counterbalance this ten- 
dency? In examining this last question we have to con- 
sider not only the effect of the new policies on wages and 
cost of living, but whether the proposed social reforms 
promise to bring more substantial benefits to the classes 
or to the masses of the population. 

For the wage question, we may either examine what 
statistics we have as to the distribution of the nation's 
total income or we may compare profits and wages. 
Without making any attempt at covering the whole 
ground, I shall merely give a few illustrative figures. 
These will suffice, I believe, to convince the unbiased 
reader of the general tendency, if, indeed, he is not al- 
ready aware of it. And in conclusion I shall discuss 
briefly the question whether the chief social reforms 
affecting incomes, namely the wage-standards of com- 



82 THE NEW DIVISION OF THE NATION^ INCOME 

pulsory arbitration tribunals and minimum wage boards, 
promise to bring any fundamental change in present 
tendencies. 

The cardinal facts in the present situation cannot be 
questioned, and they apply alike to all modern coun- 
tries : ( i ) wealth and income are increasing more rap- 
idly than population; (2) per capita wealth and income 
are increasing more rapidly than the cost of living; (3) 
real wages are not increasing as rapidly as other forms 
of real income. 

The statistics of the American wages from 1900 to 
1910, as published by the Bureau of Labor, show an 
increase somewhat less than the increase of the cost of 
living. Instead of a real improvement in that decade 
there was stagnation. And if we take a longer period, 
and compare the wages and prices of 1890- 1895 w ^ n 
those of 1905-1910 we still find only a slight increase of 
real wages, between 2 and 3 per cent. But even if the 
wage-earner was merely to continue to hold his former 
proportion of the national income the increase in real 
wages ought to have been about 14 per cent— if we may 
judge by the increase in wealth, population, and prices 
from 1900 to 1 9 10. 

We have had no official or semi-official estimates of 
income before that of Congress in preparing the income- 
tax of 1913. But the mere statement of these figures is 
enough to convince anyone that most of the larger in- 
comes are a comparatively recent growth. From these 
estimates we may calculate the incomes of from $4,000 to 
$10,000 a year at a total of $1,952,000,000, and those 
from $10,000 to $50,000 at a total of $2,083,000,000. 
The incomes from $50,000 a year to $1,000,000 a year 
are estimated at a total of $1,544,000,000. The figures 
given for incomes higher than a million are less satis- 
factory because, while the number of those receiving over 



THE NEW DIVISION OF THE NATION^ INCOME 83 

a million dollars a year is given as ioo, there is no 
way to estimate their average income. But since a 
number of large fortunes are generally conceded to yield 
incomes from $5,000,000 to $50,000,000, we may safely 
estimate the 100 largest fortunes as falling little short 
of $500,000,000, which would bring the total income of 
the millionaire and multi-millionaire class also to $1,400,- 
000,000 or more. 

Now Congress estimates the number of the well-to-do 
class (income from $4,000 to $10,000) at 304,000, of the 
wealthy class (income from $10,000 to $50,000) at 108,- 
000, and of the millionaires and multi-millionaires at 
11,900. There is no need, in this country, to demon- 
strate that all but a very small part of these incomes have 
grown up within the last half century. And this is 
equivalent to saying that they have been showing a very 
rapid decennial and even annual increase. 

Nor can there be any doubt that the larger part of all 
these incomes is due to rent, interest, and profits. Sal- 
aries and professional incomes of more than $50,000 a 
year exist in a few of the larger cities, but they form 
a negligible proportion of the total. Salaries and pro- 
fessional incomes of from $10,000 to $50,000 a year are 
rather common. But their recipients do not form a very 
large part of this class of 108,000 persons. Salaries and 
professional fees do constitute a large part of the total 
$4,000 to $10,000 incomes, however, and a considerable 
part of the business incomes in this class also may be 
described as salaries, which are not paid as such only 
because the small capitalist is his own employer. Never- 
theless the larger part of the incomes of this class is 
probably due also to rent, interest, and profits. 

Incomes from $1,000 to $4,000 are reckoned in the 
Congressional estimate at 5,000,000. By far the larger 
part are undoubtedly those of farmers, as Nearing and 



8$ THE NEW DIVISION OF THE NATION'S INCOME 

Streightofr" have proven that less than a tenth of our 
wage-earners receive as much as $1,000 a year. The 
value of farm lands has more than doubled since 1910, 
and that of other farm capital has increased in almost 
proportion — as has also the value of farm crops. Farm 
lands rose in value from 13,058 to 28,475 million dollars, 
farm buildings from 3,566 to 6,325 million dollars, farm 
implements and machinery from 749 to 1,265 millions, 
farm products from 4,717 to 8,694 millions. The num- 
ber of farmers, on the other hand, rose only from 5,737,- 
000 to 6,361,000 (an increase of 11 per cent), the num- 
ber of farm-owners from 3,650,000 to 3,948,000 (an in- 
crease of 8 per cent). 

Perhaps 99 per cent of the farmers are laborers in the 
fullest sense of the word. But they are also small capi- 
talists, especially when they own their own lands. And, 
if their capital has doubled, their profits have increased 
approximately in the same proportion. If a farmer kept 
strict books with himself, it is true, he would have to raise 
his own wages, as the farm laborer is getting more pay. 
But this rise is very little more than that of the cost of 
living, while the farmer's profits would show a far more 
rapid increase, perhaps twice as great. The material 
prosperity of this class, as every witness has testified, has 
risen rapidly. 

A certain part of the wage-earners, though less than 
a tenth, also receive more than $1,000, while the over- 
whelming majority of the professional and salaried 
classes and small business men have incomes smaller than 
$4,000, but very often greater than $1,000 a year. Cer- 
tainly the incomes of such business men, unless their 
function is useless or harmful, which often happens, are 
to be reckoned as consisting, in reality, largely of salaries, 
rather than of income from capital. This $1,000 to 
$4,000 group is not only by far more important numeri- 



THE NEW DIVISION OF THE NATION^ INCOME 8$ 

cally than the higher group (since it numbers about 
5,000,000), but it also possesses far more than the aggre- 
gate income of all the wealthier classes — which I have 
just estimated at a little over $6,000,000,000. For even 
if the average $1,000 to $4,000 income were only $1,600 
this would give a total income of $8,000,000,000. And 
if the average income of this group is $2,000 the total 
would be $10,000,000,000. 

The above is by no means a complete survey of the 
incomes of the community. Several million farmers (for 
the most part, though not wholly, tenants) have an in- 
come of less than $1,000 a year, even if we include home 
rent and home-produced food in our estimate of their 
incomes. A large number of very small shop-keepers are 
also in this class, together with the overwhelming ma- 
jority of teachers and a very large part, at least half, of 
all the professional and salaried classes. None of these 
groups has been mentioned up to the present point. But 
they undoubtedly follow, in a general way, the fortunes 
of the wage-earners. For the various occupations at the 
same income level are, as a rule, accessible to the same 
individuals. It is not difficult in many sections for wage- 
earners to become small tenant farmers, while wage- 
earners from other and poorer sections come to take their 
place; or young wage-earners may become school teach- 
ers, etc. Similarly a professional man may readily go 
into a small business or a farm owner may do the same 
thing. This brings it about that, during the course of 
a few years, the improvement in the income of those 
classes at the same income level tends to become very 
similar. 

We see, in the United States, a steady tendency for 
wage-earners and probably for these other classes at the 
same income-level to receive a smaller and smaller pro- 
portion of the national product, while the receivers of 



86 THE NEW DIVISION OF THE NATION^ INCOME 

the largest incomes get a larger and larger share, as do 
also the bulk of the middle classes, composed of farm- 
owners and the social groups I have mentioned as being 
at their income level. 

Now these or similar tendencies are world-wide. It 
was shown at the time of recent British strikes that, for a 
decade, the wages of the masses of the unskilled wage- 
earners had not been increasing as fast as the cost 
of living. The wages of the more skilled and organized 
workers did somewhat better, and these are tabulated by 
the British Board of Trade. Yet Winston Churchill 
states that "the increase of income assessable to income 
tax [over £160, or about $800 a year] is at the very 
least more than ten times greater than the increase which 
has taken place in the same period in the wages of those 
trades which come within the Board of Trade return.'' 1 
We can imagine then what the disparity would be 
if the comparison were made, not with a favored group, 
but with all the wage-earning class. Chiozza-Money 
shows, also from the Board of Trade returns, that the 
rise in wages in some of the leading occupations (chiefly 
the more skilled) from 1895 to I 9 I ° was I2 P er cent ' 
while the rise in retail prices was 18 per cent. In the 
same period the average income of the income tax-payers 
(those who receive over £160 a year) increased from 
£698 to £937, a gain of 34 per cent (though some part 
of this may be deducted for better tax collection at the 
later date). 2 

But this is by no means the worst of the situation. The 
worker is interested, not in the average income, but in 
the total income, of the upper class. It means little to 
him if the number of those receiving the larger incomes 
has increased; on the contrary there are just that many 
more getting what under a juster distribution would be 
largely his. The total income of these upper classes in- 



87 

creased (without allowing for better collection) nearly 
55 per cent. So that the higher incomes in Great Britain 
advanced from 1895 to 1900 about four times as fast as 
the pay of the wage-earners. 

A second method of gaining a general idea of the 
changes in the annual distribution of income is to com- 
pare profits with wages. There are no reliable figures 
in this country as to profits, but the Census gives us the 
figures of the chief factors upon which profits depend. 
It is found, for example, that the "total increase added 
to values by manufacturing from 1904 to 1909 amounted 
t° 35 per cent, while the increase of the number em- 
ployed was 21 per cent. Now if the employees received 
even a pro rata share of these increased values — thereby 
leaving the distribution of the product on the same un- 
equal basis as previously, wages should have increased 
11 per cent in the five years from 1904 to 1909, whereas 
the statistics of the Bureau of Labor indicate that, of 
forty-one registered industries studied from 1890 to 
1907, forty registered an average rise in wages of 5 per 
cent, while only one showed an average increase of more 
than 11 per cent for the seventeen years (and that one 
industry, Cotton Goods, showed an increase of only 12.9 
per cent), and the Bureau shows the cost of living rose 
nearly 25 per cent for that period. Of the 50 trades 
studied from 1907 to 19 12 — when the cost of living rose 
another 25 per cent — the Bureau shows only two trades 
that increased materially faster. One trade showed an 
increase of 40.7 per cent, and one other an increase of 
26.6 per cent — practically identical with the rise in the 
cost of living. The wages of the large majority of trades 
(36 out of 50) increased less than 15 per cent in the five 
years. 

Or if we compare the increase of values added in 
manufacturing £ry each worker from 1899 to 1909 we 



88 THE NEW DIVISION OF THE NATION'S INCOME 

find it rose from $1,026 to $1,290, an increase of nearly 
26 per cent. Yet the Census shows that per capita wages 
increased during this period only from $426 to $519, a 
rise of only 20 per cent. 

If we study separate industries we get similar results. 
Let us take the Steel Trust, for example, which covers 
such a large part of the steel industry. The figures given 
by its president, James A. Farrell, show an average rise 
of wages from 1902 to 1912, from $716.88 to $856.70, 
an increase of less than 20 per cent, while the cost of liv- 
ing rose nearly twice as fast. The increase of profits, 
in the meanwhile, are not to be measured in the ordinary 
way. As in the railways, mines, the lumbering and many 
other industries a large part of the profits are invested 
not to secure present returns, but to secure a steady in- 
crease of future profits. The common stock issue of the 
Steel Trust has been called an "economic crime" on which 
no profits would have been paid — the full value of the 
corporation, under competitive conditions, having been 
represented by its bonds and preferred stock. But now, 
as the editorial writer of The Saturday Evening Post 
remarks, this water is being solidified. To pay interest 
at all on such common stock is a perpetual handicap 
against higher wages and lower prices, and the corpora- 
tion has expended $175,000,000 in that way. But it has 
also expended $425,000,000, out of earnings, for the 
purchase of additional property, for new construction 
and for the retirement of mortgage liens. All of which 
means a further increase of common stock dividends in 
the future. Such expenditures on behalf of profits, for 
the year 19 12 alone, when added to common stock divi- 
dends would suffice, according to the calculation just 
quoted, to increase the pay of every employee from the 
president down by 25 per cent — or more than the total 
actual increase of wages for the ten year period. 



THE NEW DIVISION OF THE NATION^ INCOME 89 

Our increasing wealth, however, has not gone chiefly 
to the trusts, banks, and railways, nor even to manu- 
facturing generally but to agriculture. The chief ele- 
ment in the worker's diet is food, which often takes 
fifty per cent of his total income and rarely requires 
much less than forty. Now the wholesale prices of agri- 
cultural products, as shown by the Bureau of Labor, 
have risen far more rapidly than other prices. And the 
fact that the farmer has obtained a large part of this 
rise is shown by the doubling of the value of his land 
in ten years (i 900-1910). It is true that the amount 
which has gone to the average farmer is not very large, 
certainly not more than society can well afford to pay 
for his labors, but it means a very great proportional 
increase, far greater than that of the wage-earners, whose 
incomes were even smaller to begin with. The farmer's 
income is still largely to be allotted not to profits but to 
wages, though if the present tendency continues he will 
soon be far more a small capitalist than a wage-earner. 

The fact that a part of the successful farmer's pros- 
perity may be attributed to an increase of wages for 
his labor merely shows how similar his position is to 
that of the rest of the classes of the same income-level, 
$i,ooo-$4,ooo a year. The very small shopkeeper or 
business man is obviously in an identical situation, both 
as to his profits and his self-paid wages. And so also are 
the salaried and professional classes. The farmers and 
small business men have used their small capital to se- 
cure for themselves not so much profits as an excep- 
tional wage. The professional and salaried classes have 
used their small capital to secure educational and pro- 
fessional training and professional opportunity, for 
which they are paid wholly in the form of an exceptional 
wage (I shall discuss those privileges that are due to ex- 
ceptional opportunity in the next chapter). 



90 THE NEW DIVISION OF THE NATION S INCOME 

Now the middle classes, those which receive an in- 
come from $ 1,000 to $4,000, are so much more numerous 
than the wealthier classes, that any considerable percent- 
age increase of their income draws much more heavily 
from the national funds than does an even more rapid 
proportional increase in the income of the wealthier. 
And they are rapidly gaining control of the government 
and learning to use it for their financial benefit — which, 
as I have shown, is the chief meaning of the progressive 
movement. The result of this political change must be 
a still more rapid increase in their numbers and pros- 
perity in the near future, until they constitute by far the 
greatest burden on the wage-earners and other classes 
of the lowest income-level. I have indicated that the 
per capita income of the middle classes is probably in- 
creasing as fast, if not faster, than that of the upper 
classes, i. e. the well-to-do, the wealthy, the millionaires 
and multi-millionaires (taking all these together as a 
single group). But, even if it were not so, the total in- 
come of the middle-class (their average income multi- 
plied by their numbers) is surely increasing even more 
rapidly than the total income of the upper classes. 

But there are several policies by which the statesmen 
of small capitalist democracies claim they will reverse 
these tendencies and give the wage-earners and the masses 
generally a fairer share. One method is to bring down 
the prices of articles of general consumption, to reduce 
the cost of living for the masses. Another is to increase 
wages by minimum-wage boards or compulsory arbi- 
tration. 

The various proposals for reducing the cost of living 
or at least checking the rise in the cost of living, from 
the reduction of the tariff to the fixing of the prices of 
monopolies are all in the line of progress. But they do 
not necessarily tend to a more just distribution of the 



THE NEW DIVISION OF THE NATION^ INCOME gi 

national income. Such reforms would bring more order 
and stability into our economic life, and would cut down 
the profits from special privileges. But they would not 
interfere with the basic privilege I have been describing — 
the ownership of private capital or the possession of an 
occupation secured through an expensive and privileged 
education, i. e., through the ownership of private capital. 

Many of those who view economic and political ques- 
tions from the standpoint of the wage-earners have 
clearly realized the subordinate importance of the cost- 
of-living problem to this class — when separated from the 
wages problem. The fact is that, unless minimum wages 
are fixed, wages in the long run tend to adjust them- 
selves to the cost of living. The editor of Pearson's 
magazine, for example, points out that any fall in the 
cost of living due to a reduced tariff will be followed by 
a corresponding fall in wages and that then the masses 
will say to President Wilson : "You did not know what 
you were talking about. You said a lower tariff would 
help us. It has not helped us at all. The cost of living 
is less, but wages are less. 3 We are working at the same 
old jobs, living in the same old houses, eating the same 
kind of food, and at the end of the week are 'broke/ 
precisely as we always have been." 

And Debs bases his views of the tariff on the same 
grounds : "The tariff is a capitalist issue and not a work- 
ing-class issue, and so far as I am concerned the capital- 
ists, big and little, trustified and otherwise, will have to 
fight it out among themselves." [See Appendix B.] 

Neither Debs nor any other influential Socialist would 
deny that the small capitalists' reduction of the tariff is 
along the line of progress, but it is a kind of progress 
that the small capitalists will take care of (see Chapter 
II). It is true that the German Social Democrats are 
ardent free traders, just as the Australian Laborites are 



92 THE NEW DIVISION OF THE NATION S INCOME 

ardent protectionists — both for local reasons. But So- 
cialism makes of tariff reduction a very subordinate 
issue in spite of its effect in lowering the cost of living. 
The fact that wages have very soon fallen when the 
cost of living has fallen to any marked degree, and that 
they now rise, on the whole, almost exactly as the cost 
of living — sometimes faster, sometimes slower, shows 
the correctness of this view. [See figures already quoted 
in this Chapter.] 

Let us now see what effect on the relative sums going 
to profits and wages may be expected from the minimum 
wage legislation. The first thing to be noted is that the 
wage fixed is as a rule no higher than that already paid 
by the largest and most efficient establishment. So we 
find Winston Churchill stating as a ground for the pres- 
ent British law that the "best employers are already pay- 
ing wages equal or superior to the probable minimum 
which the Board of Trade will establish." 4 Similarly 
employers of Victoria favor their wage law because "it 
has forced their rivals to adopt the same scale of wages 
they are themselves obliged to pay." 5 And when the law 
went into effect in Great Britain, the same observer re- 
ports that the increases in the lace industry "were based 
on what the best employers in the trade had tried in vain 
to have adopted by voluntary agreement." 

And what were these wages paid by the "best" em- 
ployers but "efficiency" wages? That this is the basis of 
minimum wage decisions has been clearly recognized in 
the present agitation in America. Professor H. R. Seager 
argues that the employers would on the whole have to 
charge higher prices as a result of such decisions. But 
"the loss to the community consequent on higher prices 
would be more than made up by the improved health and 
emciency of the workers still employed and by the stimu- 
lus given to wise plans of social betterment." 6 



THE NEW DIVISION OF THE NATION S INCOME 93 

Professor Seager here refers to the fact that those 
workers whose efficiency did not increase with their 
wages would no longer be employed. So that wages are 
only increased in so far as efficiency and profits are in- 
creased — and it is evident that such a reform in itself 
would not lead in a million years to any distribution of 
the nation's income other than the present one. And this 
is why even such conservative organs as The New York 
Times seem mildly to favor the law. It is also recog- 
nized by the conservatives that it would devolve on the 
state to do something immediately for those forced into 
unemployment, and to guard against such inefficiency in 
the future by industrial education and provision for in- 
digent widows and orphans, and for the superannuated 
and defectives (unemployable), the social reforms to 
which Professor Seager refers. But I have shown that 
such reforms, like the minimum wage, are — in the long 
run — profitable in themselves, and that if they are 
brought to pass sooner by the enactment of a minimum- 
wage law this only serves further to recommend it to 
efficient employers and capitalist statesmen. 

The present Massachusetts Minimum Wage Board is 
called upon by the law creating it to act when the wages 
received by employees are "insufficient to supply the 
necessary cost of living and to maintain them in health." 
And it is evident that an industrial community cannot 
as a whole and in the long run make as great profits out 
of unhealthy as out of healthy employees. As the Chair- 
man of the Board writes (in the article above quoted) : 

"It requires no legislative enactment to persuade a man 
to give his horses enough to maintain them in such con- 
dition of health as to make it possible for them to do 
effective work. The reason is perfectly obvious. If one 
does not feed a horse sufficient to keep him alive, he will 
die. If he dies, one must lay out good money to get a 



94 THE NEW DIVISION OF THE NATION S INCOME 

new horse. Therefore, it is obvious that it pays to keep 
one's horse alive. But if a girl dies or drops from the 
ranks, broken down, it costs nothing to replace her be- 
yond an inexpensive advertisement for help." 



Such behavior may pay the speculative employer, or 
even a whole "parasitic" industry (one in which the 
workers are really maintained either by other members 
of the family working in other industries or by the com- 
munity), but it cannot pay employers as a whole, who 
rely ultimately on one labor supply. 

Under compulsory arbitration — as distinct from mini- 
mum wage boards — the wages of skilled labor are also 
fixed by law — and such wages are already above the sub- 
sistence minimum. Are these wages ever increased at the 
expense of the profits? According to the opinion of the 
Australian Labour Party they are not. For the present 
program for the fixing of prices, which that Party prom- 
ises soon to carry into effect (notwithstanding its recent 
slight electoral reverse), is based on the fact that the 
rise in the cost of living eats up practically all the in- 
crease of wages granted by the governmental board — 
except in the case of the minimum wage of the poorest 
paid — which I have just discussed. In the first place 
the wages of the skilled are raised as a rule only as the 
cost of living rises. Then the employer passes the in- 
crease along to the consumer in the shape of higher prices 
which result in a further rise in the cost of living. 

The remedy of the Labour Party is that prices should 
be fixed as well as wages — though it proposes only to 
extend this principle to trust products and specifically 
exempts from its proposed price-fixing the most impor- 
tant element in the cost of living, the products of the 
farm. And now Senator Works of California advances 
the same principle in this country. In both cases the law 



THE NEW DIVISION OF THE NATION S INCOME 95 

is proposed for the express purpose of cutting down cer- 
tain very excessive profits only. 

If carried far enough it would be a direct method of 
reversing the present tendency, by which the national in- 
come is distributed more and more unequally year by 
year. [See Chapter XVI.] But if carried out only 
against the trusts, which is all that is now proposed and 
all that can be done as long as a small capitalist govern- 
ment, largely composed of farmers, is in power, it would 
mean an enormous benefit to the small capitalists and a 
much smaller benefit to labor, thus leaving labor a smaller 
share than ever. 

This regulation of wages and prices is the anti-trust 
policy already proposed in this country by Roosevelt. 
Undoubtedly it is a promising line of advance, for the 
principle has only to be applied first to trusts, then to 
nationalized or municipalized industries, and, finally, to 
small employers and producers, in order to lead rapidly 
to an economic democracy. But at present it is only a 
part of the anti-trust and government ownership move- 
ment already described. 

What is most likely to happen is that the small capi- 
talists, becoming more and more radical, will endorse the 
principle of the regulation of all prices — as an ultimate 
goal — but practically will confine themselves to lowering 
the prices of the things they buy, using the full powers 
of government (by indirect means, such as tariffs) to 
keep up the prices of the things they sell. The endorse- 
ment of general price regulation as an ultimate goal will 
bring a number of idealists and radicals to their aid, 
without embarrassing them in the least, since the regu- 
lation of the prices of their own products will be declared 
impracticable — at least for our generation. 



CHAPTER V 

"EQUAL OPPORTUNITY" 

President Taft, after presupposing that all the re- 
forms of the reformers were enacted, asked: 

"What then? Votes are not bread, constitutional 
amendments are not work, referendums do not pay rent 
nor furnish houses, recalls do not furnish clothing, initi- 
atives do not supply employment or remedy inequality of 
conditions or of opportunity. We still ought to have set 
before us the definite plans to bring on complete equality 
of opportunity. . . . We listen for them in vain." 

Equal opportunity means a chance for individuals to 
compete with one another on equal terms. It is conceded 
by all democratic statesmen and publicists to be the basis 
of democratic society. Some of these contend that we 
already have equal opportunity; but the majority say 
only that we are approaching it, and that with the great 
reform program now being put into effect this approach 
will be as rapid as is practicable. 

Undoubtedly the total amount of opportunity in every 
advanced country is increasing faster than population, 
just as income is increasing faster than population. Nor 
can it be questioned that a larger and larger proportion 
of the population are being given an equal opportunity 
to compete for the more desirable positions and larger 
incomes, just as a growing number actually acquire both 
the middle and the higher incomes. 

9 6 



"equal opportunity" 97 

But the deeper question is not whether there are more 
and more people on top, but whether the distance be- 
tween the upper and the lower classes is growing greater 
or less. I have answered this question as far as income 
is concerned. How is it, now, as to opportunity? Are 
those who are now being increasingly admitted to equal 
opportunity chiefly the children of the middle-classes, 
of those having incomes from $1,000 to $4,000? 
And if the new reform program proposes to open these 
same opportunities, in some measure, to the children of 
the poorer classes, will they be extended to all these 
children or only to a minority, say the most talented 
tenth? And, if this last mentioned policy is adopted, will 
it not result in an increase of the profits of private capital 
and of the capitalist state (and so of middle and upper 
class incomes and opportunities) great enough to more 
than balance the gain of opportunity to the lower class? 
If so then the final result of this limited increase of op- 
portunity for the masses will be to increase the existing 
disproportion between the opportunities and incomes of 
the masses and those of the classes, and to still further 
widen the gulf that divides them, in a word, to make 
opportunity more wwequal as between them. 

If equal opportunity for all were to be secured by 
the gradual increase in the numbers of those who en- 
joy such opportunity, then we are undeniably progressing 
in this direction to-day. Indeed, admirers of the exist- 
ing social order have claimed that this gradual increase 
of the prosperous until ultimately all may be included — 
the masses remaining in the meanwhile little better off 
than before — is the law of progress of present society. 
Sir Robert Giffen, the eminent British statistician, for 
example, showed, as early as 1884, that the numbers of 
the British upper and middle classes formed a much 
greater proportion of the population than they had half a 



98 "equal opportunity" 

century before. There can be no doubt that this tendency 
has continued since 1884, nor that it holds also of all other 
advanced countries as well as Great Britain. But the 
rate of progress shown would require many centuries 
before it established equal opportunity for the whole 
population. And I shall indicate that, while the new 
reforms may considerably accelerate the rate, they will 
not change the character, of this evolution towards social 
democracy. It would, doubtless, still require many gen- 
erations for this kind of evolution to reach its logical 
conclusion and include the whole population in its bene- 
fits. But, unfortunately, long before it reaches the whole 
population it will apply to a majority, and this majority 
will have every temptation and opportunity to attempt to 
check even this halting form of democratic progress, 
and to endeavor to pass its privileges on to its children 
and make of itself a ruling caste. (For the probable 
outcome of this attempt see Chapter VII.) 

At present the progress of society may be analyzed into 
the following elements : 

(1) The increase in the proportion of the nation's 
income that falls to the middle class. This dispropor- 
tionately rapid rise of the middle class inevitably cuts 
down the rate of advance of the other two classes. Up 
to the present the lower class has been the chief loser. 
But taxation of the upper class and expenditures partly 
for the benefit of the lower class soon promise to shift 
the chief loss to the former. 

(2) The increase of the proportion of the population 
admitted to the privileges of the middle class. 

(3) The steady and continuous improvement of the 
condition of the lower class — or, as I have usually called 
it, the masses. This improvement will be most rapid 
when labor is being put for the first time on an efficiency 
basis, and much slower afterward. But it can never 



"equal opportunity" 99 

altogether cease and like the two former kinds of prog- 
ress it can never give labor a larger share of the product. 
Perhaps some isolated measures might seem to have this 
equalizing tendency. But on closer inspection they prove 
to be only detached fragments of a program which as a 
whole promises to repay to the rest of society all it ex- 
pends on labor — and to leave a handsome profit as well. 
This is neither equality of opportunity for all nor an ap- 
proach to such equality of opportunity. Indeed it is im- 
possible to show that it is even a movement in that direc- 
tion, until there is a radical change in the above "laws" 
of progress, that is, a radical change of the very direc- 
tion in which society is now moving. 

Yet we find that all our democratic statesmen acknowl- 
edge the principle of equal opportunity as the very 
foundation of every progressive democratic community. 
Indeed it is impossible for anyone who is not an advocate 
of a caste society to take exception to it. Nor has it any 
vagueness whatever like such phrases as "social justice," 
"democracy," or "industrial democracy." In the United 
States, Roosevelt, Wilson and even Taft have endorsed 
it explicitly and unmistakably. That is, they have shown 
that they know just what it is and that they approve 
of it without qualification. At the same time it serves to 
condemn their own political philosophy. For, as soon 
as they begin to discuss it, they show just where their 
principles fail even to point in the direction of equal op- 
portunity — to say nothing of their actual policies, which 
are, of course, much more opportunistic than their gen- 
eral principles. Roosevelt, indeed, has even qualified 
the principle by saying that he wishes merely "to start 
all men in the race for life on a reasonable equality." * 
(My italics.) 

That Roosevelt and the Progressive Party in this 
country do not in truth aim at giving equal oppor- 



100 EQUAL OPPORTUNITY 

tunity to non-capitalists, and are also very leisurely about 
improving the position of the non-capitalists absolutely — 
to say nothing of giving them even a moderately larger 
share of the product — is seen in a recent declaration of 
the ex-President. 2 Roosevelt advocates, in his Century 
article, not a more equal division of material well- 
being but a "more general division of material well- 
being." He says that the very rich in the future shall 
not become so very rich. But the merely rich or well- 
to-do are not mentioned. "The men without capital" 
are specifically mentioned as deserving better than they 
get, but nothing is said about their claim to an equitable 
share or an increasing share of the product. It is only 
to be made "easier" for them "to lead a life of self- 
respecting and hard-working well-being." This is very 
far from demanding in their name a growing share or 
even a fair share of the product. The wage-earners are 
not to be given a share in the profits, but are merely to 
be guaranteed such a minimum of life as others consider 
good for them. 

The Chairman of the Progressive Convention, ex- 
Senator Beveridge, shows (in the article above quoted) 
that the Progressives intend equal opportunity for the 
masses only as to health and strength, but by no means 
as to wealth and education: 

"We Progressives believe it is of far greater conse- 
quence that children shall grow into normal human 
beings, with an equal chance with other human beings, 
so far as health and strength are concerned, than that the 
industries which employ these children should make 
larger profits because of their employment." ( My italics. ) 

The Progressives want to give every child an equal 
opportunity with every other child "so far as health and 
strength are concerned." They by no means propose 



"equal OPPORTUNITY** IOI 

to give them an equal opportunity as far as wealth and 
education are concerned. Yet, in the same article, Bever- 
idge says that the Progressives feel that the laborer has 
been made a laborer by "the accident of birth or for- 
tune," a proposition which admits that the laborer's posi- 
tion has no general connection with inferior native abil- 
ity. The inequality of position, then, is socially unjust, 
though it is attributed by Beveridge to accident and not 
to environment, to birth and fortune, and not to society 
and its institutions ! 

President Wilson has been still more helpful in ex- 
posing to our gaze the real underlying motives of our 
small capitalist rulers. In that marvellously candid and 
illuminating book of his (already quoted) he explains 
with the utmost precision the function of "equality of 
opportunity" in progressive politics and so shows us 
what to expect in the future. Let us begin, however, 
with two phrases from his Inaugural (not included in 
the book) : 

"Equality of opportunity [is] the first essential of 
justice in the body politic," and "the firm basis of gov- 
ernment is justice, not pity." 

Taken together these phrases say: "Equality of op- 
portunity is the firm basis of government." Now Wilson 
knows perfectly well what real equal opportunity is, 
since he accurately defines it. In this country, he says, 
"no man is supposed to be under any limitation except 
the limitations of his character and of his mind; there is 
supposed to be no distinction of class, no distinction of 
blood, no distinction of social status, but men win or 
lose on their merits." And again he says that the thing 
he demands fundamentally is that everyone should be 
free and "should have the same opportunities everybody 
else has." (My italics.) Nothing could be more ex- 
plicit — in the abstract. 



102 EQUAL OPPORTUNITY 

Wilson has also made some unqualified declarations 
of economic democracy, as in the following apostrophe 
to the trust magnates : "We do not deny your integrity ; 
we do not deny your purity of purpose; but the thought 
of the people of the United States has not yet penetrated 
to your consciousness. You are willing to act for the 
people, but you are not willing to act through the people. 
Now we propose to act for ourselves." 

This brings us to ask the practical and crucial question : 
Who does Wilson really wish to govern the country, and 
to whom does he really plan to give "equal opportunity" ? 
To this question also Wilson has furnished several very 
clear answers. He identifies "people of the United 
States" with "the men who are sweating blood to get 
their foothold in the world of endeavor," and are en- 
deavoring "to start a new enterprise." And again, "the 
ordinary men" and "the unknown masses" are identified 
with this "man who is on the make." He says he wants 
to give his chief energy to promoting the growth of 
small towns such as he has "seen in Indiana," because 
they own their own industries, evidently thinking chiefly 
of the relatively few individuals who actually do own 
the industries even in these small towns, and completely 
ignoring the overwhelming majority who now, as in the 
past, own nothing aside from the houses they live in, 
and often not even those. Undoubtedly a certain propor- 
tion of the small business men of the small town have 
risen from below. But even this occurs far less fre- 
quently than it did half a century ago, while the propor- 
tion of small towns in this and every other country is 
constantly growing less. 

The central point in Wilson's program of economic 
democracy and "equal opportunities," as he himself says, 
is to remove the limitations of "private enterprise" so 
that "the next generation will be free to go about making 



"equal opportunity" 103 

their own lives what they will," again limiting his atten- 
tion exclusively to the middle classes which have the 
capital, the opportunities, or the educational privileges re- 
quired, in ninety-nine cases out of a hundred, for com- 
mercial success — even in the smallest private enterprise. 
Small businesses, he nevertheless insists, are to be pro- 
vided for the whole population: "The genius and initi- 
ative of all the people" are to be called into the service of 
business, and the new generation is to be able to look 
forward "to becoming not employees but heads of small, 
it may be, but hopeful, businesses !" In other words, the 
fundamental principle of Wilson's social philosophy is 
the same as that of Abraham Lincoln, conceived half a 
century ago! He is a "small capitalist" in his thought, 
and cannot imagine any nation or government except one 
of small capitalists. But, as he is a loyal and honest small 
capitalist, he has already made admissions which are 
fatally inconsistent with this individualistic philosophy 
(as I have shown in Chapter II) and events will soon 
push him over bodily into the State Capitalist camp. He 
has learned nothing from a half -century of world-history 
or a quarter-century in writing about it. But he will 
learn much from three more years as President of the 
United States. 

When Wilson refers to equal opportunity, he goes so 
far on several occasions as actually to identify it in so 
many words with "equal business opportunity," i. e., 
equal opportunity for those who have the capital or other 
requirements needed to set up in small business! Nor 
does he stop here. This small capitalist class is to be 
given control of the government. According to Wilson 
we have had a government of large capitalists. We are 
to have a government of small capitalists. We here 
come to the center of his social philosophy: 

"The first and chief need of this nation of ours to-day 



104 "equal opportunity" 

is to include in the partnership of government all those 
great bodies of unnamed men who are going to produce 
our future leaders and renew the future energies of 
America." Nothing is said about including the masses in 
"the partnership of government." 

If we seek for a more exact and concrete illustration 
of this position we may, perhaps, get it from Vice-Presi- 
dent Marshall's defense of his inspired remark that two- 
thirds of the people of this country were probably ready 
to confiscate all inheritance greater than $100,000. The 
following is his statement 3 : 

"The people were told in the last campaign that trusts 
were a natural evolution, and that the only way to deal 
with them was to regulate them. The people are tired of 
being told such things. What they want is the kind of 
opportunity that formerly existed in this country. 

"This is the kind of business against which the people 
are complaining. They are being told that there are just 
as many opportunities to-day as ever before; that there 
are any number of jobs ranging from $10,000 to $20,000 
waiting for the capable man. It may be that a very able 
man might not want to earn $20,000 working for the 
steel trust, however. He might prefer to start a little 
rolling mill of his own, so that he would be independent 
and his own master, even though he made but $5,000 a 
year. It is such opportunities as these that many men 
are saying are denied to them." (My italics.) 

Here again we learn who "the people" are. They are 
"the men on the make," to quote Wilson, or those who 
"might want to start a little rolling mill of their own," 
as Marshall expresses it. 

Wilson's law of social progress is : "Every country is 
renewed out of the ranks of the unknown, not out of 
the ranks of those already famous and powerful and in 
control." He should have said rather that every country 



"equal opportunity 105 

is renewed in part out of certain of the ranks of the un- 
known, since he knows enough history to know this to 
be the fact. The overwhelming majority of people in 
the best positions of society, as he well knows, are the 
children of those who are already well up in the social 
scale, and even those few who are recruited from lower 
classes very rarely come from the working class itself, 
but rather from some section of the lower middle class. 

Wilson says he looks forward to the time when "there 
will constantly be coming new blood into the veins of the 
body politic; so that no man is so obscure that he may 
not break the crust of any class he may belong to, may 
not spring to higher levels and be counted among the 
leaders of the state." The fact that a few individuals 
who are not born among the upper class may be admitted 
to it seems to be an ample justification, in Wilson's mind, 
of the whole social system. Just how many persons are 
elevated and what chances the rest have seem to be sec- 
ondary considerations. Wilson's law of progress merely 
provides for enough new blood to keep the top of society 
vigorous and to allow it to continue its rule permanently, 
as he admits himself when he confesses in the passage I 
have quoted elsewhere that very few persons actually do 
rise. (See Chapter VII.) 

But ours is an age in which industry and science are 
having more and more to say directly — even without the 
intermediation of industrial statesmen. Let us listen, 
then, to an industrial engineer, the best known promoter 
of the "scientific management" of labor, on this ques- 
tion. Taylor says that the maximum prosperity of the 
employer (and under our present social system the maxi- 
mum prosperity of the employee also) is to be secured 
only by "the development of each man to his state of 
maximum efficiency, so that he may be able to do, gen- 
erally speaking, the highest grade of work for which his 



io6 "equal opportunity" 

natural abilities fit him" and by "giving him, when pos- 
sible, this class of work to do." 4 

Here we have equal opportunity assumed as the basis 
of the maximum efficiency of industry. And the prin- 
ciple is formulated in a more scientific, that is a more 
economic and a less political, manner than in the previous 
quotations. Equality of opportunity means just this, to 
prepare every man for "the highest grade of work for 
which his abilities fit him" and "to give him, when pos- 
sible, this class of work to do." And this possibility 
exists wherever society has this class of work to be done. 
That is the only limitation that is admissible. Of course 
Taylor has only employees and their children in mind. 
Apply the principle to all children alike and we have a 
social democracy. 

Indeed the demand for equal opportunity for all chil- 
dren is doubly justified and is the most practicable way 
to really extend the policy to the whole population within 
a single generation. On this point, I believe, I cannot 
do better than to quote a paragraph from my "Socialism 
as It Is" (with slight changes) : 

"It may be that the economic positions in society occu- 
pied by men and women who have now reached matur- 
ity are already to some degree distributed according to 
relative fitness, and that, even though this fitness is due, 
not to native superiority, but to unfair advantages and 
unequal opportunity, it may be that a general change for 
the better is impossible until a new generation has ap- 
peared. But there is no reason (except the opposition 
of parents who want privileges for their own children) 
why every child in every civilized country to-day should 
not be guaranteed by the community an equal oppor- 
tunity in public education and an equal chance for promo- 
tion in the public or semi-public service (which soon 
promises to employ a large part, if not the majority, of 
the community). No believer in equal opportunity or 



"equal opportunity" 107 

democracy can see any reason for continuing a single day 
the process of putting the burdens of the future society 
beforehand on the children of the present generation of 
wage earners, children as yet of entirely unknown and 
undeveloped powers and not yet irremediably shaped to 
serve in the subordinate roles filled by their parents." 

Equal opportunity for children, indeed, promises to be 
the first principle likely to secure general acceptance 
which passes beyond the program of the "progressives," 
i. e., the State Capitalists, or even that of the State Social- 
ists (to be described in later chapters). The principle is 
irresistible in its justice and can only be covertly fought; 
it will be resisted, therefore, entirely on so-called practical 
grounds. Vast sums of money will be granted for every 
form of governmental expenditure but not for this one — 
the supreme importance of which most people already 
admit. 

Indeed, there is a branch of reform now in existence, 
which seems already to be based scientifically on equal 
opportunity for children, though, practically of course, 
like all the other social reforms of our period, it is di- 
rected primarily for the benefit of employers. Vocational 
guidance is to form a sort of bridge between vocational 
education and the reforms that aim to make the adult 
employee more efficient. Professor Hugo Munsterberg 
says that scientific vocational guidance is based upon 
"the creed of democracy" that (C just as everybody can 
be called to the highest elective offices, so everybody 
ought to be fit for any vocation in any sphere of life! } 5 

The principle has also been ably advocated by one of 
our leading editorial writers, Dr. Frank Crane, of the 
New York Evening Globe. 6 

"Without democracy among children," Dr. Crane 
points out, "there is no democracy at all." For the in- 
heritance of wealth and of exceptional educational op- 



io8 "equal opportunity" 

portunities gives certain individuals not merely an unfair 
income and a privileged position, but also "a power of 
government, of rule." All children will have equal op- 
portunity, Dr. Crane believes, in the society that is ap- 
proaching. Nor need the coming be longer delayed: 
"A nation of rational people, such as America, could, by 
conscious effort, use its common sense to give its entire 
youthful population a chance. 

"In other words, it could withdraw every boy and 
girl, until the age of twenty-one, from the economic 
struggle, put them in school and give them a fair start, 
well trained for life. 

"If we should do this we would progress, in intelli- 
gence, prosperity, and peace, more in thirty years than, 
without doing this, we shall progress in two hundred 
years." 

This reform — for, notwithstanding its high cost, it is 
a reform, costing no more than some others — would 
also be a revolution. It would change the whole struc- 
ture of society. Hereditary privileges and semi-heredi- 
tary classes would disappear with the present generation. 
Only continually changing social groups would divide 
society, and these could not serve as a basis for class 
rule, since those persons constantly advanced on real 
merit would still have their relatives and associates 
largely in other social groups. 

Now let us see whether "progressive" modern govern- 
ments — state or national — are even making an attempt 
at giving the children of the masses the same educational 
opportunity as the children of the upper and middle 
classes, or whether they are at the bottom impelled by 
the contrary policy and are trying to monopolize for 
their own children, as far as practicable, all of that edu- 
cation which is more and more indispensable for all the 
higher positions in the professions and government ser- 



"equal opportunity" 109 

vice. These "progressive" governments, though truly 
and wholly progressive when compared with the plutocra- 
cies that preceded them, are, without exception, in the 
hands of small capitalist and middle class majorities, 
and it only verifies all we know of average human na- 
ture throughout all history if they continue to use their 
political power, first of all, to provide for their own chil- 
dren and, second, to give to the lower classes either (a) 
what is left over, or (b) an equal chance to compete for 
those very exceptional positions only which are so impor- 
tant in themselves that they must be filled by the most 
able applicants from whatever class they come. 

We could thus divide the higher professional and civil 
service positions in "progressive" societies into three 
parts : 

(1) The lowest group of these desirable positions, 
being composed of the least desirable, would probably 
not be entirely filled by the children of the middle and 
upper classes. Whatever the number of these positions 
that is left over after the middle and upper class children 
have all been provided for, that number of the children 
of the masses will be given enough educational oppor- 
tunity to fill these positions, but no more. For example, 
if half of these positions are left unfilled after all middle 
and upper class children are provided for, perhaps the 
most able five per cent of the children of the masses 
might be fed, clothed and housed at public expense 
(being chosen by means of a system of competitive 
scholarships) throughout the secondary school period — 
this being the only practicable way they could get the 
technical, normal, or other education required. 

(2) A second and better group of positions would 
be almost wholly the monopoly of upper and middle- 
class children. Requiring a higher education — corre- 
sponding to the university and professional schools — 



no "equal opportunity" 

parents seeking these superior positions for their children 
would have to feed, clothe, and house them for a period 
covering not only these years but the purely preparatory 
secondary period that must precede it — a total of from 
8 to 1 1 years. And even then several professions leave 
the beginners for several years with little or no income. 
A more effective method could not be devised of exclud- 
ing 99 per cent of the children of the masses, while leav- 
ing the dooi open to all the children of the upper classes, 
and perhaps to a majority of those of the middle classes 
— which latter proportion new progressive governments 
will doubtless extend, until practically the whole of the 
middle class has this degree of opportunity and those 
born in its ranks need drop back into the first mentioned 
group of lower paid positions only when they show in- 
ferior ability. 

(3) A third group includes positions of such extreme 
importance in increasing the national wealth (and so ex- 
tremely important in increasing the incomes of the upper 
and middle classes) that they cannot consider these posi- 
tions merely as "jobs" for their children, but seek the 
best talent they can from whatever class. So, of the 
five per cent of the working-class children above men- 
tioned (or whatever the figure may prove to be) who 
have been promoted to the first-named group, all that 
show extremely exceptional talents will be given a higher 
education also — that is, will be maintained entirely at 
public expense. For the direction of government depart- 
ments, railway presidencies, etc., are positions too im- 
portant to be filled by any but the most able. 

But, if we judge by present indications, it will be a 
long while before the lower-class children promoted, even 
to the least desirable higher professions, number one per 
cent of all working-class children or five per cent of all 
students in higher institutions of learning. New York 



"equal OPPORTUNITY** III 

State has just provided 3,000 scholarships to higher in- 
stitutions of learning. The number of scholarships is still 
far under the proportion just mentioned. But this is not 
the worst of the situation. All the progress there is for 
many years will doubtless be taken up with making the 
amount of scholarships more adequate rather than with 
increasing their number. The present amount is $100 
a year and is to go towards tuition fees alone. But $400 
more, at least, would be required for maintenance. 

There are two ways in which we may pursue the en- 
quiry as to whether we are either approaching equal edu- 
cational opportunity or even making an attempt in that 
direction. We may enquire both as to the quantity of 
free education and as to its quality. And we may make 
comparisons in each instance with private education or 
with the education in "free" or public institutions which, 
for practical reasons, only middle and upper class chil- 
dren are able to take advantage of. Let us first examine 
the changing quality of public education, together with 
the reforms now being proposed. 

Employers naturally regard working-class children as 
they regard the working-class. They are a source of 
future profits and are to be improved and made more 
efficient as far as the cost is distinctly less than the prom- 
ised return. The employers' interest requires, first of 
all, that a sufficient number of the children, the over- 
whelming majority, should neither rise, nor seek to 
strenuously rise, above the rank of skilled labor. It is 
not sought, then, to develop their powers for "the highest 
grade of work for which their abilities may fit them." 
This would be done only if the efficiency of the nation 
were in view, and not merely the employers' interest. 
As the upper and middle classes fill the most important 
positions to overflowing, only a few of the workers' 
children are held to be needed for such purposes, as I 



112 "equal opportunity'* 

have shown. But as many as possible are needed as 
laborers. 

A reforming employer, Mr. George H. F. Schrader, 
has written a pamphlet in which he regards the child as 
"the State's best asset." Speaking, of course, from the 
employer's standpoint, Mr. Schrader makes the follow- 
ing typical calculation : 

The School Child as an Investment 

The value of a child, 15 years of age, being $2,500, 
New York City's 700,000 elementary school children 
represent a capital value, at that age, of $1,750,000,000 

The cost to the City of educating these children in 
the ten preceding years, at $293 per capita 205,100,000 

Profit on the investment— 88% $1,544,900,000 

An unusually low figure is here placed upon the child 
as a financial asset. But it may be seen that if employers 
can find a way to make education double the child's out- 
put, or even increase it fifty per cent (a very common 
result of training), it will pay them to expend several 
times as much as now for the public schools — provided 
they can control the character of the schools. Certainly 
an expenditure of five times the present amount, if it 
were expended effectively and exclusively along the lines 
employers desire, would still yield a handsome and safe 
profit of ioo or 200 per cent (see below). 

Indeed vocational training is so important to employ- 
ers and governments that foreign nations and even some 
American states, which would not dream of establishing 
enough maintenance scholarships to enable the children 
of the masses to compete on equal terms with those of 
the classes for higher professional positions, are sub- 
sidizing it with vast sums. Germany has gone very far 
in this direction and now Great Britain is following. 
Massachusetts gives to each locality, for vocational train- 



EQUAL OPPORTUNITY 113 

ing, an amount equivalent to all the locality pays for this 
purpose, and since 1907 the movement has been spread- 
ing rapidly in other states. The agitation for national 
aid to agricultural and industrial education promises 
soon to sweep all before it. Indeed this movement seems 
bound to absorb more money than all the other labor 
and "communistic" reforms put together. In a sense 
it is the very foundation of the whole social reform 
program. 

At the same time the outcry is becoming more and 
more insistent that the professions are overcrowded. 
And, in order to keep salaries up, the only possible way 
is to "raise the standard," and so automatically to restrict 
the number of those that can enter such employments. 
But, if the required standard of educational preparation 
is raised without requiring any additional expense to 
the student, only a very small decrease of students is 
noted. The effective method, then, is to greatly lengthen 
the time (and expense) required. This in effect cuts out 
workingmen's children entirely. In Germany the upper 
classes are brutally honest about this thing. Elmer Rob- 
erts, who admires German society, thus states it : 

"While the ministries of education and commerce seek 
to stimulate the children of those on the lowest levels to 
become skilled workers, the effort is also made to pre- 
vent too many from going into the higher technical 
fields, because Germany cannot give opportunities to the 
thousands graduating yearly from the technical universi- 
ties." 7 

It is in this same spirit of class education that ex- 
President Eliot now frankly advocates a three-class 
school system, one for the lower class, another for the 
middle class, and a third for the upper class. Dr. Eliot 
Strangely asserts that this plan is not undemocratic pro- 



114 "equal opportunity" 

vided the transition from lower to upper class schools 
is made what he calls "easy." But the door only 
opens one way. There is no provision for inferior stu- 
dents in upper class schools to pass down to the lower. 
Moreover all the children of the upper classes go to 
upper class schools or Dr. Eliot wouldn't use that term 
for them. Moreover, he contemplates the promotion only 
of a certain per cent of lower class children — and as he 
lays no weight on maintenance scholarships it would be 
practically a very small per cent. 8 As I have said : 

"Democracy does not require that the advance of the 
child of the poor be made what is termed easy, but that 
he be given an equal opportunity with the child of the 
rich as far as all useful and necessary education is con- 
cerned. Democracy does not tolerate that in education 
the children of the rich should be started at the top. 

"Those few who do rise under such conditions only 
strengthen the position of the upper classes as against 
that of the lower. Tolstoi was right when he said that 
when an individual rises in this way he simply brings 
another recruit to the rulers from the ruled, and that the 
fact that this passage from one class to another does 
occasionally take place, and is not absolutely forbidden 
by law and custom, as in India, does not mean that we 
have no castes. Even in ancient Egypt it was quite 
usual, as in the case of Joseph, to elevate slaves to the 
highest positions. This singling out and promotion of 
the very ablest among the lower classes may indeed be 
called the basis of every lasting caste system. All those 
societies that depended on a purely hereditary system 
have either degenerated or were quickly destroyed. If, 
then, a ruling class promotes from below a number suffi- 
cient only to provide for its own need of new abilities 
and new blood, its power to exploit to protect its privi- 
leges, and to keep progress at the pace and in the direc- 
tion that suit will only be augmented — and universal 
equality of opportunity will be farther off than before. 



"equal opportunity" 115 

Doubtless the numbers 'State Capitalism' will take up 
from the masses and equip for higher positions will con- 
stantly increase. But neither will their opportunities 
have been really equal to those of the higher classes, nor 
will these opportunities, such as they are, be extended to 
any but a small minority." 9 

It is certain that there is already a considerable move- 
ment in the direction of Dr. Eliot's proposed three-class 
school system. The tendency to class division in the 
past has arisen chiefly from the inability of the poor to 
keep their children long in school, and from the unwill- 
ingness of taxpayers to pay much for the education of 
non-taxpayers' children. But this tendency is now being 
immensely hastened in the interest of employers. 

"In 1910, of nineteen million pupils of public and pri- 
vate schools in this country, only one million were secur- 
ing a secondary, and less than a third of a million a 
higher, education. Here are some figures gathered by 
the Russell Sage Foundation in its recent survey of pub- 
lic school management. The report covers 386 of the 
larger cities of the Union. Out of every 100 children 
who enter the schools, forty-five drop out before the 
sixth year; that is, as soon as they have learned to read 
English. Only twenty-five of the remainder graduate 
and enter the high schools, and of these but six complete 
the course." 

Dr. Eliot himself points out that, while there has been 
great improvement in the first eight grades since 1870, 
progress is infinitely slower than it should be, and that 
the majority of children do not yet get beyond the eighth 
grade. 

"Philanthropists, social philosophers, and friends of 
free institutions," he asks, "is that the fit educational out- 
come of a century of democracy in an undeveloped coun- 



Il6 "EQUAL OPPORTUNITY" 

try of immense natural resources? Leaders and guides 
oi the people, is that what you think just and safe? 
People of the United States, is that what you desire and 
intend?" 10 

There can be only one answer to Dr. Eliot's question. 
There can be no doubt that actual equality in the "battle 
of life" was the expectation and intention of those who 
settled and built up the United States after our separa- 
tion from Great Britain, as it has been of all the dem- 
ocracies of new countries. 

But what are the conditions to-day? Dr. Eliot shows 
that while private schools expend for the tuition and 
general care of each pupil from two hundred to six hun- 
dred dollars a year, and not infrequently provide a 
teacher for every eight or ten pupils., the public school 
which has a teacher for every forty pupils is unusually 
fortunate. 

"Is it not plain." he asks, "that if the American people 
were all well-to-do they would multiply by four or five 
times the present average school expenditure per child and 
per year? That is. they would make the average expen- 
diture per pupil for the whole school year in the United 
States from S6o to Sioo for salaries and maintenance. 
instead of Si 7.36, as now. Is it not obvious that, in- 
stead of providing in the public schools a teacher for 
forty or fifty pupils, they would provide a teacher for 
every ten or fifteen pupils'" (My italics.) 

I summed up the present public school situation in my 
"Larger Aspects of Socialism" (Chapter XII; : 

"The amount expended on the public schools. $425,- 
000.000. looks large, but it is not. It amounts to less 
than S5 per capita. We expend an almost equal sum on 
militarism 1 army, navy and pensions;, and immensely 



"equal opportunity" 117 

greater amounts on several forms of luxury. The an- 
nual bill for alcoholic liquors is $2,000,000,000, and for 
tobacco, $1,200,000,000. Jewelry and plate take $800,- 
000,000, not to mention innumerable other luxuries 
which, when added together, would make a total of bil- 
lions. Moreover, our consumption in many of these 
lines is increasing faster than the growth of the public 
schools. What satisfaction can we have, then, either in 
this rate of development or the insignificant total of ex- 
penditure now reached? 

"And how are the nation's public schools advancing? 
We are told that the expenditures on common schools 
increased from $220,000,000 in 1900 to $425,000,000 
in 1910. This sounds like an enormous increase. But 
we must remember that the increase of the number of 
pupils was 15 per cent. Then we must remember that it 
took about $1.25 in 19 10 to purchase the same goods that 
cost $1.00 in 1900. In the meanwhile other govern- 
mental expenditures, aside from schools — for example, 
on army and navy, or, in the cities, on police — were in- 
creasing far more rapidly. 

"When we try to find an accurate financial measure for 
what each child is getting we must ask first of all how 
many teachers there are in proportion to the pupils, or 
what fraction of a teacher each pupil secures? While 
the number of pupils has increased fifteen per cent., the 
number of teachers has increased only twenty per cent. 
If we take ex-President Eliot's standard, that the size of 
classes should be reduced from forty or fifty, as at pres- 
ent, to ten or fifteen, this means that we need three or 
four times as many teachers. At the present rate of 
progress this object would be attained in about one thou- 
sand years! 

"If we can afford $4,000,000,000 for three luxuries 
alone, can we not afford that sum to mould the human 
race of the next generation ? Ten times the present amount 
expended, or $4,250,000,000, which would be only 
one-seventh of our national income, is the very minimum 



n8 "equal opportunity" 

with which we should begin educational reform. Of 
course, this sum would include the maintenance at pub- 
lic expense of all children who showed any aptitude for 
the higher courses, and there would be a corresponding 
saving to parents. Part of the money needed could come 
from a heavy tax on ground rent, part from heavily 
graduated income taxes, and part from heavy taxes on 
luxuries such as those mentioned, tobacco, alcoholic 
drinks, jewelry, etc." 

There is, of course, a tendency for public school ex- 
penditures to increase. But I have pointed out not only 
that this increase is likely all to go in one direction (that 
which most benefits employers), but that the normal ex- 
penditures and growth in other directions are being cut 
short. 

"While the demand of the people and of most edu- 
cators is for a broader education for the masses than 
that we now have, the demand of business men is for a 
narrower one. The interest of the masses requires two 
kinds of educational progress, an improvement and ex- 
tension of general education for all, and after this a spe- 
cial occupational or vocational training. The business 
community, who are also taxpayers, want less of the 
former kind of education and more of the latter. But it 
would be unpopular to confess this policy. It is easier to 
demand that all new expenditures shall be for vocational 
training, while resisting any considerable increase in ex- 
penditures for any other kind of education. Thus the 
normal growth of general education is automatically but 
effectively checked ; there is some improvement, but only 
a small fraction of what is required and what the com- 
munity can well afford. 

"In the name of two principles, 'industrial education' 
and 'business methods,' the public schools are being com- 
mercialized," says Carlton. "Commercialization means 
reduced wages for the teacher, fewer educational 'fads' 



"equal opportunity" 119 

or improvements, in short, reduced expense per pupil 
(and where it does not go this far it means checking 
normal development in all these directions). The antithe- 
sis is finance vs. education; the taxpayer vs. the child; 
special interests vs. society. 

"The 'special interests' are not only the taxpayers, but 
the employers and capitalists. And the antithesis does 
not always mean an actual decrease in present expendi- 
tures. Carlton himself points out that a large part of 
the $400,000,000 or $600,000,000 spent on criminals 
might be saved to the taxpayer by better schools. If this 
is true the taxpayers, when better enlightened and organ- 
ized, will not object to a certain increase of taxes for 
schools. Better schools might save equally large sums 
saved in better health, and as only $450,000,000 are now 
spent on the common schools, the taxpayers may ulti- 
mately consent to very considerably increased expendi- 
tures. 

"But this is only a small part of the possibilities. Most 
of the taxes are paid by capitalists or employers. If 
the industrial efficiency of employees can be sufficiently 
increased by schools, they might consent to allow several 
times as much money to be expended on them as at pres- 
ent. But there is a rigid limit somewhere to all in- 
creased expenditure that would bring a margin of profit 
to taxpayer or employer. It is when his limit is reached 
that we shall see the antithesis of 'the taxpayer vs. the 
child' and 'special interests vs. society' in its naked ugli- 
ness. The conflict exists to-day and is holding school 
progress back, when compared to what it would be were 
taxpayers and employers given no special consideration. 
But because there is a certain limited progress, and be- 
cause these interests require this degree of progress, their 
reactionary influence is somewhat cloaked and escapes 
full exposure." 

Yet the movement to make education exclusively in- 
dustrial will surely first fulfill its legitimate function — 



H20 "equal opportunity" 

within a decade or two — and then go to such excesses as 
to cause a reaction. The community will in the mean- 
while have advanced far on the other lines of radical 
social reform and the demand for equal opportunity for 
all children will become insuperable, the first point at 
which both progressivism and that "Laborism" I de- 
scribe in later chapters will be transcended. 

Already there are signs pointing in this direction. The 
Wisconsin legislature came very near, recently, to ap- 
propriating $17,000,000 to enable every girl and boy in 
the state to get a higher education. And already newer 
communities, like Oklahoma, are slowly approaching a 
proper public school expenditure. 11 We have figures 
comparing public school expenditures to wealth. If we 
estimate the national income at about 20 per cent of 
national wealth, we can see approximately how much is 
going to the public schools. We then find that while the 
older states, like New Hampshire, are expending about 
one per cent of the income of their population on public 
education, states like Oklahoma are spending between 
three and four per cent. It does not seem improbable 
that genuinely self-governed communities will hesitate to 
double this amount before many years. And, if they do, 
it will not be long before they have reached a standard 
similar to the one I have given above. But it must be 
noted that the majority in these communities consists, 
without exception, not of propertyless wage-earners, but 
of small farmers, and that it is their children that are 
chiefly benefited. Such small capitalist communities, 
however, will furnish models of democratic education, 
and when their systems are applied to the non-capitalist 
masses of industrial communities, we shall be far on the 
road to equal educational opportunity. But more than 
one great struggle between the classes must intervene 
before that day can arrive. 



CHAPTER VI 

DEMOCRACY VERSUS MAJORITY RULE 

Democracy has two widely different senses. It either 
means the rule of the majority, or it means this and 
something more. The rule of the majority, when that 
majority is always composed of the same persons, may 
become a tyranny, as in those slave-owning ' 'democra- 
cies" where the slaves have happened to be less numerous 
than their masters. Now we have merely been striving 
towards majority rule, and have nowhere quite obtained 
it. We therefore take it for granted that, under that 
supposedly ideal government towards which we have 
been striving — a pure democracy, the majority would be 
a constantly shifting one, as it has often been in the past. 
This was the case in this country as long as the empire 
of free land in the West made everybody a potential 
small capitalist. The result was that nearly every ele- 
ment of the population found itself, sooner or later, a 
part of the ruling majority. 

In such a form of democracy each member of the 
majority is considerate of the rights of minorities be- 
cause he may belong to a minority himself some day. 
So, as part and parcel of our idea of democracy, have 
gone principles that go beyond mere majority rule, 
namely, the principles of liberty and of equality before 
the law. This means trial by jury and freedom of 
speech, press, and assemblage. And it is coming to mean 

121 



122 DEMOCRACY VERSUS MAJORITY RULE 

efficient political machinery that gives minorities every 
opportunity to make themselves heard and felt: propor- 
tional representation, direct legislation and direct popu- 
lar control of constitutions, the recall of elected officials, 
etc. 

Democracy in the narrower sense of majority rule 
means, in its practical application under present con- 
ditions, merely the abolition of all special privileges above 
those of the middle group of society, which is the con- 
trolling factor. Democracy, in the broader sense, tries 
to increase the power of those minorities that are below 
this middle group. The privileged minorities are already 
on the defensive and in retreat, the exploited minorities 
are now the source of every new movement, and their 
revolt is often destined to advance, not only themselves, 
but, still more the middle groups, which lie above them. 

The progressive movement has already taken up the 
narrow form of democracy, the attack against privileged 
minorities, and, before many years, will doubtless come 
to work for it everywhere and without qualification — 
applying its principles to industry as well as to govern- 
ment. In many places progressives and radicals have 
accepted the larger democracy also, and beyond doubt 
will come to accept it everywhere — but only in govern- 
mental and political matters, not in industry. 

We can now answer the question, Does progressivism 
lead to industrial democracy? The answer is that it 
leads to one form of democracy in industry, namely to 
majority rule, but that it would confine the larger democ- 
racy, which demands the recognition of the rights of 
minorities, to political questions, excluding fundamental 
or industrial issues. And the reason for this is that on 
industrial questions, such as those that involve the inter- 
ests of small capitalists and employees who have invested 
their capital to secure educational privileges, as against 



DEMOCRACY VERSUS MAJORITY RULE 123 

the interests of the mass of wage-earners, the majority 
and the minority are not shifting, but are as fixed as the 
occupations on which they are based. This was clearly 
recognized by the framers of the American Constitution, 
who, in speaking of "interests," refer in every case to 
the wealthy and well-to-do as the minority and to the 
poorer and property less as the majority. Progressivism 
does lead to industrial democracy, then, in the more scien- 
tific but narrower sense of the term. It does not lead 
towards industrial democracy, in the fuller and ordinary 
use of the word. 

But progressivism does, undoubtedly, lead to political 
democracy in the fullest sense (i. e., in both senses of the 
word). Leaving the question of industrial democracy to 
be dealt with throughout later chapters, let us examine 
this less important, but still extremely significant, ten- 
dency towards complete political democracy. 

Progressivism has not yet progressed this far, but it 
is already moving rapidly and with increasing speed and 
momentum in this direction. Its motives are very clear. 
It is not yet ready to establish political democracy, ex- 
cept in those places where there is already a stable, re- 
liable, and fixed majority of small capitalists. In its 
first stage, then, progressivism shows hesitation. But this 
stage has already passed in Switzerland, Australia, 
France, and our Western States. 

At the second stage when a majority of small capi- 
talists seems secured, progressives accept democracy 
without qualification — on the political field. The rights 
of minorities and of individuals are liberally recognized, 
since the incomes and exceptional opportunities of the 
small capitalist majority are in no way menaced by exist- 
ing minorities, and indeed are made more secure by a 
liberal policy. 

The third stage comes when industrial evolution, which 



124 DEMOCRACY VERSUS MAJORITY RULE 

cannot be wholly controlled by any ruling class, begins 
to introduce new social groups into the majority. Even 
to-day the small capitalists are learning that it pays them, 
and in no way damages their interests, to make alliances 
with the conservative labor unions which represent the 
more fortunate wage-earners, the upper ten per cent per- 
haps, or those who receive $800 or more a year — a class 
which probably numbers, in this country, from a million 
to two million. As manufacturing industry continues to 
grow more rapidly than agriculture, and cities continue 
to expand more rapidly than towns, this class gradually 
gains a greater and greater importance. And with 
nationalization and municipalization it will be further 
and still more rapidly augmented. Where the process is 
very advanced or very rapid — and where full political 
democracy would already give this class the balance of 
political power — we find that the more radical progress- 
ives no longer hesitate to make their political democracy 
complete. 

Wilson and Roosevelt will try in vain to confine the 
recall of judges and other measures of radical political 
democracy to communities that are predominantly agri- 
cultural. They cannot hope to succeed for more than a 
few years. Nor will Roosevelt's assurance that he does 
not intend to extend his measures of popular control over 
the Supreme Court have much weight. The policy the 
states adopt for their judges and constitutions they will 
apply to the United States also. Already a group of 
Roosevelt's own followers in New York demand a na- 
tional constitutional convention for 1920 and the whole 
party is pledged to an easier process of national consti- 
tutional amendment. A large group in Congress, drawn 
from all parties, already demands amendment by direct 
vote, while Senator Gore wishes Congress to enlarge the 
Supreme Court, a policy which if occasionally repeated 



DEMOCRACY VERSUS MAJORITY RULE 12$ 

would destroy its power of the Court over the Constitu- 
tion and make Congress supreme. 

Constitutions are becoming useless in all advanced 
countries in proportion as majorities actually do the 
governing. So the House of Lords, already reduced to 
a fraction of its former power, is on the road to aboli- 
tion, and the power of the French Senate, it seems, will 
not last long. In other words the skilled wage-earners 
in England and the small peasants in France are held to 
be sufficiently conservative in their radicalism to be 
trusted with the balance of power. 

Many democrats cannot understand, then, how our 
South can be called truly "progressive" — since the ne- 
groes are without political power, and so are practically 
slaves, not to individual white men, but to white men's 
governments. Yet Roosevelt is consistent in announcing a 
policy for the South that leaves the negroes powerless, 
but insists that all their needs and claims can be ade- 
quately attended to without the ballot. And there can 
be no doubt that this paternalistic program will be ac- 
cepted from the hands of some progressive democrat. 

For the essence of this "progressive" policy is the 
same as that of the North. In the North the unskilled 
masses are usually given a vote solely because they are 
nearly everywhere in a minority. In the South they are 
deprived of a vote because they are often in a majority. 
And where they do not furnish all — or practically all — 
the unskilled labor, they are in a very similar condition 
to the whites of that class. In Alabama and other states, 
when hard times drove the poor whites into a class-war 
two decades ago, they did not hesitate to ally themselves 
with the negroes, and the timber-workers of Louisiana 
and neighboring states are including the negroes in their 
movement to-day, just as miners and longshoremen have 
done in recent years. 



126 DEMOCRACY VERSUS MAJORITY RULE 

On the other hand a more and more successful effort 
is being made to carry to the politically powerless South- 
ern masses all the labor and educational reforms being 
adopted in the North — which shows that these reforms 
are neither due to the political power of the masses nor 
intended primarily for their benefit. And meanwhile, 
with the negro laborers disfranchised, all the forms of 
democracy, including the referendum and recall, can 
safely be tried among the whites of higher classes. Nor 
is this all of the similarity between the two sections. As 
these democratic forms become effective the ballot will 
gradually be extended to the upper ranks of the negroes, 
as the political situation in Oklahoma, Arkansas, and 
even Louisiana indicates. The small capitalists and 
skilled workers will find that they cannot hold the bal- 
ance of power except as the power of those beneath them 
balances that of the privileged classes, and as they grow 
more radical they will give more and more of the negroes 
the ballot — always with one limitation, that there shall 
be no approach even to a majority of unskilled or farm 
laborers. (The fact that these are mostly colored has 
little to do with the case.) For this is the limitation of 
all State Capitalist and even of all State Socialist ad- 
vance along political lines. [See next chapter.] 

The politically democratic state that is rapidly ap- 
proaching, then, will have no element of despotism, but 
will, on the contrary, be very much freer in every direc- 
tion than any previous society. No greater error could 
be made than Herbert Spencer's when he called this col- 
lectivism in industry and this regulation of labor "the 
coming slavery," or Hilaire Belloc's when he refers to 
it as "the Servile State." Yet a very large part of our 
social philosophers have taken this view. Even in strictly 
industrial matters, where only the narrower form of 
democracy (majority rule) will prevail, not only will the 



DEMOCRACY VERSUS MAJORITY RULE 12J 

workers be better off, but they will have more oppor- 
tunity, more choice of occupation, more leisure, more 
ability to get about, a more equal treatment before the 
courts, more personal liberty, more rights in their politi- 
cal and economic organizations, and more political power 
than they have to-day. The fact that all this improve- 
ment will be doled out to them only in proportion as it 
increases the profits of the employers, or of the capital- 
istic state, does not disturb or modify the tendency itself. 

Belloc predicts the Servile State, where a certain part 
of the population, though guaranteed "security and suffi- 
ciency," which are the most grievous needs to-day, "will 
be constrained by positive law" to labor for the ad- 
vantage of others. But Belloc rather fears this state 
than actually expects it. He expects rather "the dis- 
tributive state," where the "determining number" are 
small capitalists. And he acknowledges that it is Prus- 
sia and England that give rise to his fears of the Servile 
State. These countries are certainly not the determin- 
ing factors in the modern world. Not only in France 
and Ireland, which Belloc mentions as being under the 
opposite conditions, but in the majority of advanced 
countries, the small capitalists are in a majority and 
governments are beginning to do all in their power to 
increase their prosperity and to augment their numbers. 
And, even in England and Germany, the gradual division 
of the large estates by governmental interference, so suc- 
cessfully carried out in Ireland, Australasia and else- 
where, is promised as a result of the program of Lloyd 
George and the present Government. 

Far from being the opposite pole to State Capitalism 
(or Partial Collectivism), as Belloc supposes, a small 
capitalist majority — or such a majority pieced out with 
parts of the salaried and professional classes and the 
"aristocracy" of labor — is the very foundation of this 



128 DEMOCRACY VERSUS MAJORITY RULE 

form of society. And such a society, as Belloc and all 
other fair-minded observers admit, would be not only 
far less financially burdensome on the masses than the 
present one (as I have shown in previous chapters and 
as Belloc allows), but also it would be far less oppressive 
for all classes — though it might extract more profits 
than ever out of the great mass of wage-earners and the 
poorer classes. 1 

To call this new society more despotic than the old 
is to be blind to the very basis on which it is built, the 
scientific exploitation of the workers as machines — but 
as human machines. For it was the essence of the weak- 
ness of the older capitalism, from the standpoint of 
maximum profits, that it was either unable clearly to 
understand the necessity of dealing with this human ele- 
ment in labor, or if it understood did not have either the 
means, the organization, or the opportunity to carry its 
knowledge into practical effect. 

There could be no more colossal error, then, than to 
call this collectivist capitalism "the most despotic and 
degrading form of capitalism" as does Eugene V. 
Debs. 2 On the contrary it is the least despotic form of 
capitalism, and also the most enlightened, as it brings the 
greatest profits to capital. Those who speak, or endeavor 
to speak, in the name of the masses of wage-earners, it is 
true, have a far better reason to be suspicious both of 
State Capitalism and of the closely related State Social- 
ism, which I shall describe below, than do the champions 
of the small capitalists, of the professional class, or of 
skilled labor. For the progressive movement is least 
clear and definite in the matter of its attitude to the 
rights of organized labor. 

Yet, when the progressive movement will finally have 
found itself, there is no reason to suppose that it will not 
be more liberal to the labor organizations at every point 



DEMOCRACY VERSUS MAJORITY RULE 120, 

than was the older capitalism, though it will come very 
far from satisfying the unions of unskilled labor. It is 
true that the position of Roosevelt, of the Australasian 
governments, and of other leaders of the progressive 
movement, at first pointed in the reactionary direction, 
and many were deceived (including the present writer). 
But the whole movement, all over the world, now seems 
to be headed towards more and more liberal policies — 
however unsatisfactory the point reached may still prove 
to those unions that represent the laboring masses. And 
there is every capitalistic reason why this liberal tendency 
should continue. 

The demands of the unions are similar in all advanced 
countries, and so also are the concessions of the progres- 
sives. What the unions want is the right to strike, free- 
dom of speech and assemblage, the right to picket, and 
the right to boycott. What is being conceded is all these 
rights, with certain conditions. Public employees or 
those engaged in semi-public work are being forced to 
accept some form of penalty if they cause heavy losses 
through strikes. This penalty in the past has usually 
been the dismissal of employees — especially the leaders. 
But already, in France, they have frequently been re- 
instated, though usually at a lower grade. And we have 
no reason to doubt that this method will be extended — 
in the case of those strikes which the majority of the 
voters consider unjustified, while no penalties will be ap- 
plied in other cases. Similarly all the other rights needed 
by the unions are gradually being granted. In the well- 
known exceptions to this rule, which still frequently 
occur, as recently in Lawrence, Paterson, Calumet, and 
Colorado, it is noteworthy that the progressive press, 
which will soon be in the ascendant, takes ground 
against the persecution by the authorities. 

In America important steps are being taken towards 



130 DEMOCRACY VERSUS MAJORITY RULE 

granting the unions' program — as far as rights are con- 
cerned. The right to boycott will be partially restored by 
the modification of the Sherman law. Judges that inter- 
fere with strikes, picketing, boycotts and other rights are 
being restrained by the regulation of injunctions, and 
still more by the recall. 

But most important of all is the check to the move- 
ment towards compulsory arbitration of labor disputes, 
which seems to be dying with the older capitalism. The 
small capitalists and their State Capitalist governments 
are certainly violently hostile to the fact of strikes, but 
they do not want to tamper with the right to strike. This 
is due to the discovery that it works better to leave the 
right intact and to penalize its abuse. By this policy the 
small capitalists' allies, the "aristocrats of labor," are 
appeased, and the same end is accomplished. For the 
skilled workers do not want actually to strike. They 
have much to lose and little to gain — since when they do 
not strike they have the sympathy of the final arbiters — 
the small capitalist public — and may lose it through strik- 
ing. But they cannot arouse this public without the 
right to strike and an occasional strike menace. 

As to public employees, they will never be given the 
right to strike without penalty. But they do strike occa- 
sionally and will continue to strike as a last resort. They 
everywhere refuse to surrender the claim to this right. 
But they do not tend to make a frequent use of it, and 
their position is essentially the same as that of the skilled 
workers in private industry. They will strike, as a rule, 
only when they have a great and unquestionable griev- 
ance. And in such a case the small capitalist public will 
insist, as in France, that the penalties of the law be not 
applied against them — even if a special act of legislation 
is needed to accomplish this result. 



CHAPTER VII 

THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

Political democracy, in the full sense, is scarcely yet 
anywhere in existence. Almost everywhere it is still 
hampered by constitutional limitations. These undemo- 
cratic features of constitutions are tending rapidly to- 
wards extinction in the most advanced nations. But 
meanwhile the restrictions are still there, and, having no 
actual experience of democracy, people do not yet know 
what it means. 

A pure or complete political democracy means, at the 
very least, majority rule, not in Government alone but 
also in industry. Society has hitherto rested upon an 
industrial foundation which was reflected in certain po- 
litical constitutions. These constitutions protected the 
economically privileged minority and kept the political 
power in its hands. Under a pure democracy, on the 
contrary, it is not constitutions that express the economic 
power of the ruling class, but elections. Hitherto the 
economic powers have ruled politics indirectly — through 
constitutions. Under a complete political democracy the 
economic powers will rule directly — through elections. 
Economic and political power will be one. 

Under the constitutional system property ruled di- 
rectly. Under the democratic system, numbers rule di- 
rectly. Emerson very rightly noted of the constitutional 
politics of his time that "when the rich are outvoted, as 

J 3* 



I32 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

frequently happens, it is the joint accumulations of the 
poor that exceed theirs." Constitutional parliaments have 
been a sort of political stock exchange, where "money 
talks." The small capitalists found that even if the rich 
as a whole had less money than they, the more concen- 
trated form of the former's wealth often gave them 
practical monopolies, not only in industry, but in govern- 
ment. So they have finally come to see that the only 
way to counterbalance the organization and power of the 
rich is to give power to the propertyless, that is, to make 
numbers really count. 

The impending change to genuine majority rule is so 
revolutionary that we cannot fully realize what it means, 
even in imagination. Yet it can mean nothing less than 
this — that the very shape and the internal structure of 
society are to be moulded henceforth — in very large 
measure — by the ballot. Hitherto either property or 
economic strength has been the power behind the throne. 
These are as indispensable as ever, but they will hence- 
forth be expressed largely by the ballot. 

Under genuine majority rule "the total national capi- 
tal" may still govern for a time, as Engels says it always 
does. And this prolongation of capitalist government 
will at first leave all non-capitalists in the same place in 
the social scale where they are to-day. But, though 
Engel's principle will still hold, it will be modified so that 
incomes from salaries and wages will also be capitalized, 
taken into the reckoning, and given the same weight as 
equivalent incomes from capital. Undoubtedly "the total 
national capital," in this new sense of capital plus capi- 
talized income, will long continue to govern. But even 
during this transitional period it will be of vast moment 
to every social class just which groups of capital or in- 
comes hold the balance of power. Though the unskilled 
and propertyless masses are at first used as mere pawns 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 1 33 

in this struggle, they come nearer to power in proportion 
as one topmost class after another is shorn of power. 

Social classes in present society have hitherto arisen 
from economic evolution, either unaffected, or not very 
deeply affected, by government. Now as government be- 
comes a more perfect industrial instrument, under more 
perfect control — and the danger of political revolution 
is eliminated through instituting majority rule — the ma- 
jority government will be almost omnipotent in industry, 
and will even have the power to create or abolish social 
classes. Edward Bernstein has pointed out that govern- 
ments could create new sections of the middle class. 
They also will have ample power henceforth to divide 
the working-class into two parts and so to differentiate 
these divisions as to put them in deep hostility to one 
another. 

Not only can a majority of a political democracy create 
certain new class divisions but it will be obliged to do 
so. For, while the new government may create or abol- 
ish whole social classes, it cannot do this at will. Eco- 
nomic evolution cannot be wholly controlled in the near 
future, if it can ever be wholly controlled. Economic 
evolution continues even outside of the lines the ruling 
majority now coming into power would like it to main- 
tain in order that they might remain the ruling majority. 
From recent declarations of policy we can see that every- 
thing will be done to increase the numbers and prosperity 
of the classes that compose this majority — even to the 
point of creating new classes of a similar (small capital- 
ist) character. But economic evolution will continue out- 
side of the lines thus laid down for it, since classes lower 
than these in the economic scale will long continue to 
increase more than proportionately to population, espe- 
cially the groups of more highly trained manual and brain 
workers and government employees. 



134 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

What must be the result? Will the power pass either 
by revolution or by gradual and continuous stages — 
beginning forthwith- — into the hands of the lower 
classes? By no means. The result to be expected is 
somewhat as follows: 

As fast as the lower classes grow they will push their 
upper layers and their upper layers only into the major- 
ity, the rest of the lower classes remaining in the same 
powerless minority as now. 

The former majority will not be very willing to receive 
this new addition into its ranks. But its more far- 
sighted members will point out that the process is in- 
evitable. The new recruits, representing new occupa- 
tions, will, indeed, considerably alter the character of 
the old majority. However, society having once been 
firmly reconstructed on the foundation of majority rule, 
there is no help for this, and the process is likely to be 
repeated several times — though not indefinitely, since the 
present tendency for the lower classes to increase dis- 
proportionately will not continue indefinitely. This ten- 
dency, on the contrary, will sooner or later cease, both 
because the character of the lower remnant — after the 
upper layers have repeatedly been taken away — may not 
be as expansive as it was, and because, as society 
evolves, the majority will gain a more and more complete 
control over social evolution, so that they can put an 
end to any disproportionate increase of "the lower 
orders." 

As long as new social groups are being taken into 
the governing majority there is a certain limited kind of 
progress away from social parasitism, i. e., the more or 
less hereditary control of one class by another, toward a 
really socialized society. But, as soon as this process 
ceases, this form of progress will also cease. Will all 
progress toward an equitable distribution of social power 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS I35 

among the classes then come to an end? Not at all. 
For, though the lower classes will then find themselves 
a fixed and permanent minority, a permanent minority 
has means of making itself felt and the development first 
of State Capitalism and then of State Socialism will 
vastly increase this power. Only we have been working 
so strenuously to attain majority rule that we have long 
ceased to study either the technique by which minorities 
protect themselves generally, or the situation into which 
the particular minorities of the near future may be 
brought by that social evolution which, in spite of all 
that is being done to prevent this effect, tends more and 
more to reach all classes alike. A ruling majority may 
more and more successfully favor the prosperity and 
numerical growth of one class at the expense of another. 
But it will not be able to check the disproportionate im- 
provement of the character and intelligence of the lower 
classes — for this kind of improvement is due to the fact 
that highly developed human beings are more valuable 
to all society than undeveloped ones. 

Once society has reached the present degree of organi- 
zation — where continued progress is assured, at least for 
a considerable period — the activity that pays rulers best 
is the development of the ruled. And this will apply as 
well to the permanent ruling majority of the near future, 
as to the ruling minority of the present. Such a major- 
ity, as many recent statements of progressives and radi- 
cals prove, will be even more hopeful than were former 
rulers that they have at last reached a point where the 
foundations of society will remain stable, where there 
will be no more changes in the relative power and position 
of the classes, and where they may continue to> keep the 
chief profits of the development of the lower class for 
themselves. But it is inevitable that the lower class will 
use the new power due to individual development in 



I36 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

order to win more power — or more self development. (I 
point out how they may do this in a later chapter. ) 

Majority rule in government and industry may lead, 
then, by an indirect process, and at a later stage, to a so- 
ciety based upon equal economic rights and opportuni- 
ties. But its first result will be to establish a small capi- 
talist rule which will try to perpetuate itself. Nor will 
this society, when it will have had its day, give way at 
once to an industrial democracy, but it will pass grad- 
ually into a society controlled by privileged manual and 
brain workers and exceptionally indispensable classes of 
government employees, such as certain sections of the 
railroad workers. 

I have characterized the progressive movement in the 
German cities, where the class lines are most sharply 
defined. Howe merely states a fact, of which these Ger- 
man cities are proud, when he says they are governed by 
"bankers, merchants, real-estate speculators and profes- 
sional men." 1 Similarly the progressive British cities, 
as Howe points out, are governed by a minority, consist- 
ing of taxpayers. I have quoted Winston Churchill's 
avowed reliance on the middle classes, and Lloyd George 
also expresses the belief that no party can hope for suc- 
cess at present in Great Britain "which does not win the 
confidence of a large proportion of the middle class." 2 
If there was any further doubt as to the classes behind 
the progressive British legislation of to-day, it can be 
eliminated by noting the classes most favored by the in- 
come and inheritance taxes, namely incomes from £200 
to £3,000 ($1,000 to $15,000) — approximately the same 
classes that are similarly favored in Germany. 

A nation consisting mainly of small capitalists and a 
government under their control is the outspoken ideal 
of American statesmen also, from Jefferson and Lincoln 
to Roosevelt and Wilson. Such a society is even viewed 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 1 37 

as permanent. Collier's Weekly recently expressed this 
view by saying that no country had reached "social ma- 
turity" until it had this social structure : 3 

"A genuinely civilized country — economically speak- 
ing, at least — is one whose land is divided into small 
holdings, each of which supports its own family. This 
is the land's final, stationary stage, so to speak — the sort 
of thing one sees, for instance, in the smiling, truly pros- 
perous provinces of France. The French lend money to 
all the world. They are perhaps the most prosperous of 
peoples." 

The idea is that the small capitalists ought to be a 
privileged class and ought to rule the country, and that 
other classes ought to be prevented from growing too 
large, if possible, or at least should be kept from power — 
all supposedly for the general good, of course. 

Roosevelt has slightly modified this principle. New 
classes are to be admitted to power, but only as they be- 
come small capitalists: 

"Ultimately we desire to use the government to aid, 
as far as safely can be done, the industrial tool users to 
become in part tool-owners just as the farmers now are." 
(Speech of Aug. 5, 19 13.) The ex-President goes on 
to explain that he refers especially to certain sections 
of the workingmen, indicating the upper layers — which 
shows that he has a glimpse, beyond State Capitalism, 
of that State Socialist period that is bound to grow im- 
mediately out of it. He retains the small capitalist preju- 
dice, however. For, while these upper levels of the work- 
ingmen will undoubtedly be elevated to privilege and 
power in the near future, long before we have industrial 
democracy, they will scarcely become small capitalists in 
the process. There is no considerable tendency for gov- 
ernmentally operated industries to share their profits with 



I38 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

labor, while there are many other more scientific ways 
of favoring the "aristocracy" of labor, such as higher 
pay, more promotions, etc., etc. 

Again President Wilson has given us a complete and 
satisfactory explanation of his attitude on this question. 
Let us turn to his views on the relations of the classes. 
Like the thorough-going State Capitalist he is getting to 
be, Wilson believes that government is society. A gov- 
ernment, in his opinion, is not a thing that is set up by 
governing classes (though, quite inconsistently, he here 
admits the existence of governing classes), but by "man- 
kind." It is not the "institutions" of government, how- 
ever, that represent mankind, but apparently something 
corresponding to Rousseau's "general will." Both insti- 
tutions and constitutions, he urges, exist to serve men, 
not to rule them. But he does not apply this to govern- 
ments. Traditional bodies of law (e. g., the common 
law), as he says, do not constitute the essence of govern- 
ment, nor is government a "machine." But no sooner 
does he repudiate what he accurately names the New- 
tonian and mechanical conception of governmental au- 
thority, which regards government as a machine, than 
he sets up in its place the far more despotic Darwinian 
view that government is "a living thing." Even if he 
confined himself to the far less obnoxious but re- 
lated dogma, which he also adopts, that "society is an 
organism," regarding government at least as a man-made 
thing, just as he admits that governmental institutions 
are man-made, modern sociologists would disagree with 
him. Science does not admit his claim that society 
should "obey the laws" even of life itself — if these laws 
are regarded, as he regards them, as being something 
outside of or above man. The evolution of life and of 
society does not consist, as he states, in their "accommo- 
dation to environment," but in the very opposite process 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 1 39 

of adjusting environment to life and society. Yet Wil- 
son's whole political philosophy consists in the aim to 
adjust government to present society, as if society itself 
were unchangeable. While he aims to further a whole 
revolution in government he has no program whatever 
for furthering the evolution of society into that radically 
new form it must take if his professed ideal of equal 
opportunity is to be realized. 

Wilson's vague generalizations tend to obscure class 
lines. Yet the President has also been specific and con- 
crete. And these specific and concrete statements, 
though directed by him against government by large 
capitalists only, will apply almost without exception 
against any capitalist government— and thus may have 
the practical effect of leading the minds of the people 
beyond mere State Capitalism to the immediately follow- 
ing and closely related period of State Socialism — in 
which the ruling majority are not capitalists at all but 
privileged groups of wage-earners. 

For example, Wilson not only endorses equal oppor- 
tunity — as an ultimate goal, of course — but also makes 
his own many other principles that would serve equally 
well as the basis of a really self -governed industrial so- 
ciety — provided they are used as principles of present 
action and not as mere ideals of the future. In their 
form of statement some of these principles go even be- 
yond State Socialism and are nothing less than Social- 
istic; in the application made by Wilson they point to a 
small capitalist government — which in this period of 
concentrated capital and industry can only mean State 
Capitalism. In their practical psychological effect these 
statements condemn all capitalist government, and there- 
fore point forward to the succeeding stage of social de- 
velopment — the character of which Wilson does not even 
hint at, but which is, as I shall show, State Socialism. So 



140 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

he says: "The amount of wages we get, the kind of 
clothes we wear, the kind of food we can afford to buy, are 
fundamental to everything else." He understands thor- 
oughly, too, that political institutions are based upon 
economic institutions : "Laws have never altered the 
facts, laws have necessarily expressed the facts." Two 
other passages leave no question that he not only accepts 
this view, but understands it fully and interprets it con- 
sistently: "History is strewn all along its course with 
wrecks of governments that tried to be humane, tried to 
carry out humane programs through the instrumentality 
of those who controlled the material fortunes of the rest 
of their fellow-citizens. ... If you will point me to the 
least promise of disinterestedness on the part of the mas- 
ters of our lives, then I will concede you some ray of 
hope ; but only upon this hypothesis, only upon this con- 
jecture: That the history of the world is going to be 
reversed, and that the men who have the power to op- 
press us will be kind to us, and will promote our interests, 
whether our interests jump with theirs or not." Here we 
have a truly democratic interpretation of history and it 
certainly applies as much against the small capitalist ma- 
jority that Wilson favors as against the large capitalist 
minority that he attacks. He definitely states moreover 
that our masters of industry do not speak "in the interest 
of those they employ," and it is difficult to see how he 
could make any distinction in this respect between mo- 
nopolists and employers who are not monopolists. 

The President not only refers to "the governing 
classes" but also speaks of the need of a government 
"unassociated with the governing influences of the coun- 
try," which latter he very rightly states to have consisted 
up to the present of the trust magnates and their asso- 
ciates. "Where there are classes in point of privilege,'' 
he declares, "there is no righteousness, there is no jus- 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 141 

tice, there is no fair play." The inheritance of capital, 
however, he strangely refuses to regard as a "privilege," 
and certainly he does not view the possession of ex- 
pensive and restricted educational opportunities in that 
light. 

In another illuminating passage Wilson shows how 
the upper class is continually bribed by the very fact that 
it is an upper class, and, while the context indicates that 
he means this to be applied mainly to the monopolists, 
he does not say so, and we have a right to take him at 
his word, The passage is as follows: "A cynical but 
witty Englishman said in a book, not long ago, that it 
was a mistake to say of a conspicuously successful man, 
eminent in his line of business, that you could not bribe 
a man like that, because, he said, the point about such 
men is that they have been bribed — not in the ordinary 
meaning of that word, not in any gross, corrupt sense, 
but they have achieved their great success by means of 
the existing order of things and therefore they have been 
put under bonds to see that that existing order of things 
is not changed; they are bribed to maintain the status 
quo." As a description of every ruling class psychology 
it would be difficult to add anything to this. It obviously 
applies to small capitalists as well as large capitalists. 
Wilson also opposes "the conduct of our affairs and the 
shaping of legislation in the interest of special bodies of 
capital." How can he honestly or logically reject an 
amendment striking out the word "special" and so op- 
pose all legislation in the interest of capital? And when he 
says that he opposes "a small controlling class" who are 
"the masters of the government of the United States," 
can we not move to amend by striking out the word 
"small" and pointing out that it makes no difference to 
subjects whether their masters are few or many? The 
question that he asks of the economically combined large 



142 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

capitalists : "Are these men to continue to stand at the 
elbow of government and tell us how we are to save 
ourselves — from themselves?" — we can equally well ask 
of the politically combined small capitalists. Similarly 
another of his basic principles applies to our problem 
with a very slight and unescapable change : "You can't, 
by putting together a large number of men who under- 
stand their own business, no matter how large it is, make 
up a body of men who will understand the business of 
the nation as contrasted with their own interest. ,, Ob- 
viously it makes no more difference to the masses how 
many are these men, than it does how large their busi- 
ness is, in either case they will never "understand the 
business of the nation as contrasted with their own in- 
terest." 

We are "on the threshold of a revolution," as the 
President says, and "we are going to reconstruct eco- 
nomic society as we once reconstructed political society." 
The changes to be made are "radical," but Wilson is 
right, from the small capitalist standpoint, in not fearing 
such a revolution and in thinking it will come "in peace- 
ful guise" and that we will "win through to still another 
age without violence." For, though the State Capitalist 
program when complete will constitute a revolution — 
within the bounds of capitalism — it will be a revolution 
from which capitalism has nothing to fear. 

The establishment of a government based on a small 
capitalist majority would be revolutionary in many ways. 
Not the least of these is that, in one sense, it would not 
be a capitalistic government. The majority of the pres- 
ent governing classes (the larger capitalists) are undoubt- 
edly hard workers — notwithstanding the army of mere 
idlers they support. The larger part of their income, 
however — no matter how much we may allot as being 
really salaries, and as merely bearing the name of profits 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS I43 

— comes from their capital and not from their labor. 
This situation will be completely reversed under State 
Capitalism, for there can be no doubt that the larger part 
of the income of the small capitalists (or those on the 
same income level) is due rather to their labor than to 
their capital or their special opportunities, i. e. privileges 
of education and occupation. 

On the other hand it must not be forgotten that small 
farm-owners, for example, usually secure a fair return 
from their capital — and so in a large measure are true 
capitalists. For we must include in their profits the ris- 
ing value of their land, their saving in house rent, and 
in home-produced food supplies — as well as a number 
of other incidentals. Moreover they are usually employ- 
ers as well as capitalists, for, while they do not always 
hire labor continuously, they usually hire a considerable 
amount at one time or another throughout the year. 
Similarly the professional and salaried classes of the 
same income level generally have a few thousand dollars 
of income-paying property, and when, during their life 
career, they reach their highest salaries or fees, they usu- 
ally employ at least one servant. These classes are then, 
after all, as sharply differentiated from the working 
classes — even from the "aristocracy of labor" — as they 
are from the large capitalists. 

The small capitalists, in a word, are semi-capitalists. 
A government of small capitalists, while not a labor gov- 
ernment, is by no means altogether a capitalist govern- 
ment. And if a considerable proportion of non-capital- 
ists are taken into the ruling majority the resulting gov- 
ernment would represent labor even more than it repre- 
sented capital. And this is just what is taking place. 
The small capitalist government is already evolving into 
a "labor" government — at least in one sense of the word. 

For I have pointed out that "the aristocracy of labor" 



144 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

will gradually be taken into the governing majority, 
that with their growing voice this majority will gradually 
become non-capitalist, and that State Capitalism will thus 
gradually be transformed into State Socialism. (The 
process is already beginning in Australia.) This social 
group, often inaccurately referred to as "the skilled," are 
those manual workers who have secured for themselves — 
through some special advantage, a position in which they 
are more or less protected from the competition of the 
masses. There is also a large group of low-salaried brain 
workers at the same level, as well as a certain number of 
very small capitalists — those for whom their capital is a 
mere protection from labor competition, and yields almost 
no returns above wages, e. g., most of our tenant farmers. 

Scott Nearing has estimated, on the basis of national 
and state statistics, that only about one tenth of the 
wage-earners of the chief industrial section of this coun- 
try receive more than $800 a year, while three fourths 
receive less than $6oo. 4 There is, of course, no sharp 
dividing line within the ranks of labor, any more than 
there is between any social groups, but there is a vast 
difference between the group that averages less than $500 
a year and the group that may average $1,000. Experts 
are agreed, for example, that the sum required to keep a 
family of five in health and efficiency in the industrial 
part of the country lies well above the former figure and 
somewhat below the latter (see Nearing's article). We 
all know, moreover, the world of difference made in the 
whole of our lives by doubling or halving any ordinary 
income. And we know that to halve an income of a thou- 
sand dollars must cut immensely deeper than to halve 
one of two or four thousand. 

The fact that the skilled are, perhaps, above the level of 
income needed to maintain industrial efficiency, while the 
unskilled are considerably below it, brings it about that 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS I45 

the attitude of these two groups towards the progressive 
movement — the labor policy of which is based on effi- 
ciency — differ in the most fundamental way. 

The unskilled, being a permanent minority politically — 
without the aid of the skilled, which they can obtain 
only until the demands of the latter are satisfied — and 
being also unable to force concessions from the rest of 
the community or from the government by labor union 
or economic action (without aid of the skilled), must 
rely, at present, on improvements incidentally but inevi- 
tably brought to them by the evolution of State Capi- 
talism.* 

While the unskilled are at the present moment power- 
less to help themselves to any considerable degree by or- 
ganized action and, even in those benefits that are handed 
down to them from above, do not get any fairer or 
larger proportion of the nation's income and opportuni- 
ties — the skilled are, or soon will be, in a far better situ- 
ation. They receive, it is true, a much smaller share of 
the benefits of State Capitalism than do the unskilled, 
for, as a rule, their income already provides sufficiently 
for the minimum of physical health and strength required 
by industry — including enough to prevent the physically 
injurious labor of wives and children. The only direct 
benefit the skilled receive from the labor policy of State 
Capitalism is the superior training it affords — together 
with a certain increase in earning power. But this 
benefit is received by unskilled labor to a still greater 
degree. For the masses of workers are now getting their 

* I do not stop at this point to give the evidence that leads to 
these conclusions. Two later chapters deal with the limitations — 
from the standpoint of the unskilled — of the political and economic 
action under the small capitalist regime of State Capitalism. Two 
other chapters indicate the possibilities of economic and political 
action for this class under State Socialism. These points are 
alluded to here only for the purpose of contrasting the position of 
the skilled and the unskilled. 



I46 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

first installments of industrial training and organization, 
which always tend to give greater returns than the later 
installments. 

On the other hand, the skilled are already able to 
gain considerably both from labor union and political 
activities, and they will gain increasingly by these 
means. Economically they are able to paralyze some 
of the community's most indispensable services, such as 
transportation and communication. That they rarely 
do so is due to the fact that they could not win such 
strikes without a large measure of outside support, 
and if they have this same support they can accom- 
plish still more, with less possibility of failure, by polit- 
ical action. 

For already the skilled and better paid wage-earners, 
together with other social groups with similar incomes 
and opportunities, hold the political balance of power in 
many places. Their inevitable increase in numbers, under 
State Capitalism, together with the equally rapid numeri- 
cal increase of the lower ranks of the professional classes 
and of the favored groups of government employees, will 
almost certainly give these social elements the balance of 
political power in all advanced countries within a decade 
or two. And the thing that counts in politics is not mere 
numbers, but the balance of power. 

The balance of power is not held, as is sometimes sup- 
posed, by any small party which is sufficient in numbers 
together with another party (or parties) to make up a 
majority. It is commonly supposed that if one party 
represents 49 per cent, of an assembly and another repre- 
sents 5 per cent, the latter may hold the balance of power. 
But it is evident that the larger party may be the one 
holding the balance, provided it is situated between the 
other parties. The control is held by the party situated 
in the middle, and cannot be held by any party represent- 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS I47 

ing the extreme of radicalism or conservatism, unless that 
party has an absolute majority. 

The political balance of power, as far as we can now 
see, will never pass into the hands of the unskilled work- 
ers — even with the addition of others on their income and 
opportunity level. For their numbers are not increasing 
proportionately to the rest of the population and they oc- 
cupy one extreme of the social and political scale. The 
skilled workers and the related groups referred to, on the 
other hand, are already situated near the political centre, 
and their increase, both through the present economic 
evolution and through the legislation of State Capitalism, 
is bound to become more and more rapid. And, having 
secured their advantages largely by legislation, they will 
make a still greater use of legislation and still more firmly 
consolidate their position when they come wholly to con- 
trol it. 

To use a popular expression, the unskilled are des- 
tined to remain "outsiders" for an indefinite period while 
the skilled are rapidly becoming "insiders." But the 
separation between the two classes is even greater than 
I have described. For there are other factors to be taken 
into consideration besides mere income level — which so 
widely divides certain groups of the working-class. When 
a lower income is doubled, for example (as that of the 
skilled may be within a generation), it often happens 
that opportunities for personal promotion and advance- 
ment, small as they may still remain, are ten times greater 
than previously, while the opportunities for children may 
be a hundred times greater. 

And, finally, the position of the skilled workers and 
related classes may be completely revolutionized even 
under State Capitalism (i. e., before they control the 
government). During this earlier stage they will still 
have one great grievance, however, that their proportion 



I48 THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 

in the benefits of progress does not increase, and this will 
make them act with the unskilled, until they secure the 
control of government and industry. But State Capital- 
ism, as it sees the skilled coming into power, will prob- 
ably allay all the special grievances that now unite them 
to the unskilled, thus paving the way for a complete 
separation of the two groups the moment the skilled gain 
possession of the government. 

Sidney Webb finds that the spirit of revolt at the pres- 
ent moment is strongest among the upper half of the 
wage-earners. But this type of wage-earner revolts, as 
Webb explains, not so much against inequality of income 
as against the fact that "he and his class always obey or- 
ders" — which will obviously be remedied under State 
Socialism, at least for all those that become a part of the 
ruling class. This wage-earner revolts further "against 
the misery beneath into which he may at any time be 
thrust, and against the ever-present peril of unemploy- 
ment to which he feels himself exposed.'' 5 These fears 
will be removed and these evils will be remedied by pend- 
ing State Capitalist reforms. For unemployment, as I 
have shown, is one of the most expensive of wastes to the 
capitalist class, and is being remedied as fast as the small 
capitalists become organized as a class and get full con- 
trol of government. 

The moment State Capitalism is established the gulf 
between the skilled and unskilled will have deepened itself 
irremediably. This is doubtless why the chief spokesmen 
of skilled labor, such as Sidney Webb, are already so 
greatly concerned to preach down all class war. Feeling 
the social groups they represent about to attain to power, 
they do not want to see the present revolutionary move- 
ment among the labor unions continue, and become a 
revolt against their coming government. They are abso- 
lutely satisfied with majority rule in industry — the so- 



THE CLASS-STRUGGLE OF THE SMALL CAPITALISTS 1 49 

called industrial democracy, without being in the least 
concerned because of the fact that, if such a regime were 
long continued (which, fortunately, seems improbable), 
it would create an oligarchy composed of privileged brain 
and manual wage-earners and government employees. 

This is the meaning also of the statement of The New 
Statesman, on which Sidney Webb and Bernard Shaw 
are editors, that the real progress of the future will not 
be brought about "by the warring of social classes ,, 
but by the union of all the forces of "public spirit." This 
is the way the resistance of a minority is always regarded 
by the majority, or by those who count upon soon becom- 
ing a majority. The majority always claims to represent 
"public spirit" and always says that the demands of the 
minority are pernicious class war. 

But I have, in some measure, anticipated several later 
chapters. Before discussing the class-war within the 
working-class, which seems certain to arise under State 
Socialism (Chapters XII to XVI), I shall show the in- 
ability of the laboring masses to offer an effective political 
or economic opposition under the present regime of State 
Capitalism (Chapters X and XI), and the probable suc- 
cess, on the other hand, of the "aristocracy of labor" in 
gradually transforming State Capitalism into State So- 
cialism (Chapters VIII and IX). 



CHAPTER VIII 
THE LABOR UNIONS UNDER STATE CAPITALISM 

It is becoming generally recognized that under the 
existing social system the great mass of wage-earners 
are powerless to make any considerable advance on their 
own initiative, either by political or by labor union action. 
The whole program for raising the wage-earners to a 
level of greater efficiency by governmental action is 
based on the fact that they are totally unable to accom- 
plish even this moderate advance for themselves. How 
baseless, then, are the professed hopes of many Labor 
Unions and Labor Parties that, either under the existing 
system or under the regime of State Capitalism, into 
which we are now entering, the mass of the workers, 
whether through labor union or through political action, 
will be able gradually to advance wages at the expense 
of profits, or to bring about other changes of conditions 
that benefit the masses more than the classes. 

Both ex-President Roosevelt and President Wilson 
recognize that the great mass of workers are helpless. 
I have already referred sufficiently to the paternalistic 
attitude of Roosevelt (Chapter VII). A passage in Wil- 
son's Inaugural Address, however, is again worth atten- 
tion in this connection. I mean his reference to "great 
industrial and social processes which men cannot alter, 
control, or singly cope with." Ordinarily one is not justi- 
fied in reasoning negatively, from what a document does 
not say. But such a weighty and condensed document as 

150 



THE LABOR UNIONS UNDER STATE CAPITALISM 151 

this, and one in which the language too is as carefully 
chosen as in this instance, is an exception. Wilson is 
careful not to state that the laborers cannot "cope with" 
these industrial and social processes by organized action 
(political or labor union action), but only that they can- 
not do so "singly." For it is generally admitted that the 
mass of laborers can in some measure defend themselves 
against wage-decreases, etc., by collective action. But it 
is true that they cannot "alter" or "control" these indus- 
trial and social processes, i. e., they cannot advance them- 
selves, even by organized political or economic effort — 
either under the existing system or in the state which 
Wilson contemplates. (The possibilities of political and 
economic action and of a class-struggle of the laboring 
masses under the succeeding form of society, State So- 
cialism, will be considered later — see Chapters XV and 
XVI.) 

The progressive statesmen of the ruling-class are un- 
doubtedly right. If the conditions of the great mass of 
wage-earners are to be materially improved under the 
present system or that of State Capitalism, even if this 
improvement be not a very great one and leave them a 
smaller proportion than ever of wealth and power, the 
change must be carried out by the ruling-classes. Yet 
many Socialists claim that the present demands of Labor 
and Socialist Parties already amount to a political class- 
struggle between capital and labor, while an equal num- 
ber of Socialists and Syndicalists claim that nearly all 
labor union action has more or less of this class-struggle 
character, that is, that it advances labor at the expense 
of capital, or expends a large part of its energies in the 
pursuit of this object. I shall take up the labor union 
side of this question here, and its political side in the fol- 
lowing chapter. As the Labor and Socialist parties have 
become the mere representatives of the unions in most 



152 THE LABOR UNIONS UNDER STATE CAPITALISM 

countries, including Germany, these are, in reality, but 
two aspects of a single question. 

"Whether he knows it or not, whether he wills it 
or not, every time the worker fights for a larger share 
of the product either by means of increased wages or 
fewer hours, he is fighting for the control of the means 
of production." Here is a proposition, from the Munici- 
pal Program of the New York Socialist Party, that is 
endorsed by the majority of Socialists everywhere. Every 
labor union struggle, provided only it is honest, and not 
aimed directly against some other union (as sometimes 
happens), is supposed to be a part of a class-struggle. 
This view is held regardless of the facts in each particular 
case. The cost of increased wages sometimes obtained 
may be at once charged up to consumers, often with an 
additional profit for employers, or the group that strikes 
may gain less than the working-class lose as a whole (in 
the capacity of consumers), meaning a net loss to the 
working-class, yet it is still supposed to be a class-strug- 
gle. The employers of an industry previously to a strike 
may have been paying wages so low that the workers and 
their children may have been degenerating industrially, 
or becoming a burden on the community, or in reality they 
may have been supported at the expense of other mem- 
bers of the family working in other industries, who were 
in turn threatened with industrial deterioration because of 
this drain. In either of these three cases employers as 
a class were losing by the conditions that preceded the 
strike. As a class they therefore often favor a strike 
of such low-paid employees for higher wages. Yet such 
a strike, though favored by a majority of employers, 
is considered by most Socialists as a part of a struggle 
against the employing class! 

What, as a matter of fact, are the possibilities of labor 
union action in a society under the domination of large 



THE LABOR UNIONS UNDER STATE CAPITALISM 1 53 

or small capitalists, either under competitive capitalism 
or under State capitalism? We may classify these possi- 
bilities under four heads: 

(1) A union which controls a certain kind of skill 
may not only obtain wages beyond those its members 
could obtain if acting singly, but it may even go far 
beyond this point and sometimes obtain a sort of 
monopoly wage — usually paid for by the other workers 
in the shape of the higher prices which are then charged 
for the product of the industry in question. The unskilled 
cannot, however, control the supply of their labor, unless 
they control the mass of workers of all industries (which 
has never yet been accomplished in any country), for 
the reason that labor which is not highly specialized can 
be brought, in a relatively short period of time, from one 
industry into another. 

(2) Certain industries, in which the highly skilled do 
not play a very large part, yet have a position of such 
strategic importance that all the workers, when striking 
together, may considerably improve their position, and so 
take their place among the higher paid. Such are the 
transportation industry, and perhaps the mining industry, 
and a few others. In this case, again, the rest of the 
working-class pays the bill in the shape of an increased 
cost of living. 

(3) The first organization of the unskilled workers, as 
in the textile industries, brings certain gains to employ- 
ers. Among these are a greater uniformity and regular- 
ity in labor conditions, protection from small strikes, and 
the setting of a minimum standard below which specula- 
tive or "unfair" employers cannot go. The larger and 
more efficient employers will therefore gain as much as 
they lose from this first strike— provided the result is a 
compromise, in which the workers appear to "lose" a part 
of their demands (though there can really be no loss of 



154 THE LABOR UNIONS UNDER STATE CAPITALISM 

a thing a man never had), and provided no aggressive 
union is recognized which might foster further strikes. 
The resistance to a second strike in such cases will be 
much more determined and successful than the resistance 
to the first. 

(4) Where wages are exceptionally low, in industries 
for which more far-sighted employers favor a legal mini- 
mum wage, those strikes will naturally be more or less 
favored which have the same end — a minimum wage — in 
view. And in this case outside employers and the capi- 
talist public may often favor, not only the first revolt, 
but repeated strikes. 

When unions seek to go beyond such limitations, the 
employers' interests and capitalist opinion, which domi- 
nate governments and all other influential institutions, 
unite to repress them. If the unions, in spite of this fact, 
undertook to pass beyond these limits, we would indeed 
have a struggle between capital and labor. But if they 
did so, they would be sacrificing the present for the fu- 
ture. Such action might hasten the day when the masses 
of the workers would be given an equal voice in industry 
and government. But it could accomplish no immediate 
results and it might delay existing union development, 
which is along the lines I have just indicated. For these 
reasons the labor unions, all over the world — with the 
exception of those few that are under the domination of 
unskilled labor — have carefully avoided anything resem- 
bling a class struggle. They have rarely given any large 
part of their energies to the organization of the un- 
skilled — which alone would make them representative 
of labor as a class, and this is surely the very first pre- 
requisite for a class-struggle. Nor, on the other side, 
have they challenged the whole of the capitalist class by 
making an onslaught on profits generally (unless in rare 
instances), but have nearly always tempered their de- 



THE LABOR UNIONS UNDER STATE CAPITALISM 1 55 

mands to gain some capitalist support. The only impor- 
tant exceptions have been a few strikes conducted by the 
newer unions of the unskilled or semi-skilled, sometimes 
loosely called "syndicalist unions," and such strikes have 
been rarer than at first appears. 

The great British strikes of 191 1 and 1912, for ex- 
ample, were called syndicalistic. The unskilled, it is true, 
had been newly organized, there was a very large propor- 
tion of sympathetic strikes, and union leaders were forced 
to aggressive action by union members. But two of 
the largest strikes, those of the seamen and the railway- 
men, were settled at the expense of the masses as con- 
sumers, it being fully understood that the settlements 
were to be followed by a large increase in transportation 
charges. Similarly the leaders of railway unions in Amer- 
ica have often gone so far as actually to agitate for higher 
railway rates. Recently the President of the Locomotive 
Engineers, Warren E. Stone, declared that it might be 
necessary for the Locomotive Engineers to give the 
American people a much needed lesson in this matter 
(through a strike). And when the American coal strike 
of 19 1 2 was won by the miners it was lost to the Ameri- 
can working-people. For the Department of Labor has 
shown that, when the miners won $4,000,000 a year, this 
was used as a pretext to squeeze $13,450,000 out of con- 
sumers. But the miners never dreamed of saying anything 
against the inflation of prices at the time of their agree- 
ment. Undoubtedly they were, and are, opposed to the 
mine-owners charging $13,450,000 to the consumers. 
But there is no slightest evidence that they were ready or 
able to offer any serious opposition to an increase of 
$4,000,000 in prices (i. e., enough to cover their wage- 
increase). In other words, they did not strike against 
the profits of the employers but against the rest of the 
working-class. Yet we are told that theirs is a "Socialist" 



156 THE LABOR UNIONS UNDER STATE CAPITALISM 

and an "industrial" union, engaged in a class struggle, 
together with the rest of the working-class, against the 
employing class. 

So we find the French Syndicalist, Pouget, claiming 
that the capitalists may be expropriated to-day by a series 
of strikes, while the American, Haywood, says : "We will 
take from the bosses what we can get to-day, and we will 
hold what we get. Then we will take more." x Hay- 
wood contends that the workers will be able to keep this 
process up until they "put the bosses out of business." 

The theory that rises in wages have been gained or 
can be gained to-day at the expense of capital, and that 
labor union conflicts are part of a struggle of the work- 
ing-class as a whole against the capitalist class as a whole, 
dates as far back as Karl Marx, and his views, which 
are still those of most Socialists, must be briefly noticed. 
Marx believed that, "if, during the phase of prosperity," 
the worker "did not battle for a raise of wages, he would 
during the average of one industrial cycle (i. e., including 
the phase of depression) not even receive his average 
wages, or the value of his labor. 

"If he resigned himself to accept the will, the dictates 
of the capitalist, as a permanent economical law, he would 
share in all the miseries of the slave without the security 
of the slave." 2 

At the time when Marx wrote, these propositions were 
probably largely, if not wholly, true. But nearly every 
word of Marx's analysis of our present political economy 
presupposes competition among capitalists. Now em- 
ployers' associations, trusts, common financial control of 
the trusts, and government ownership or control are 
already more important influences over labor than com- 
petition is, and are rapidly reducing competition to an 
entirely subordinate position. Indeed, nobody more 
clearly foresaw or grasped the first part of this process 



THE LABOR UNIONS UNDER STATE CAPITALISM 1 57 

(the earlier or economic phases of industrial concentra- 
tion as against the later or political phases) than did 
Marx. To use one of Marx's own dialectic modes of ex- 
pression, his predictions have been so completely fulfilled 
that his writings have become obsolete. 

Of course some truth still remains in the Marxian 
propositions I have quoted. Certainly the laborer must 
not resign himself, certainly he must organize and make 
a constant fight for better conditions and higher wages, 
for in this way he can materially hasten the betterment 
which progressive capitalism has planned for the exclu- 
sive purpose of increasing its profits. But the laborer is 
less and less menaced with insecurity, insufficiency or 
servitude in proportion as State Capitalism is established. 
He is already being protected against receiving less than 
his average wages during depression, for this would mean 
industrial inefficiency and would ultimately cut into 
profits. And this protection is gradually being extended 
in every direction. 

Marx implies, and his followers assert, that it is only 
the workingmen themselves who will "set limits to the 
tyrannical usurpations of capital." 3 This may have been 
the case when there was no limit to the free supply of the 
kind of labor that was demanded by capital. But there 
is a decided limit to the supply of the efficient labor de- 
manded to-day, and this in the face of a rapidly growing 
demand. We may soon be able to say, on the contrary, 
that the only limit to the exploitation of labor by capital 
is that set by capital, itself. For the unions are effective, 
as I have indicated, only when supported by a large part 
of the capitalistic public. 

Marx himself says, in this connection, that "in its 
merely economic action capital is the stronger side." But 
he argues that in political action this is not the case and 
that "without the workingmen's continuous pressure" 



I58 THE LABOR UNIONS UNDER STATE CAPITALISM 

the legal shortening of the working-day, which occurred 
in England in the middle of the last century, would 
never have taken place. On the contrary the tendency 
towards shorter hours is approved — as promising more 
profits — by a host of employers the world over. Such 
employers, of course, favor the legal shortening of the 
working-day for all employers alike — especially if they 
have already introduced it in their own establishments. 
And, finally, the legal working-day has been shortened in 
many communities where the working-class was even 
more powerless than the British working-class of 1850, 
which Marx had in mind. 

Marx notes that the tendency of capital to increase the 
intensity of labor more rapidly than the working-day is 
shortened must be counteracted by a rise in wages, if we 
are to avoid "a deterioration of the race." 4 But this 
deterioration of the race could be afforded by employers 
in Marx's time because it affected only the laborers of 
those few spots on the globe that had then brought under 
the capitalist system, and employers could easily replace 
this deteriorated labor by fresh labor brought from the 
country or imported from other nations. Now capitalism 
has already spread over half the globe and is spreading 
rapidly over the other half. Within its former bounds, 
moreover, the demand for labor has greatly increased. 
And, finally, the small capitalist governments now in 
power restrict the immigration from non-capitalist coun- 
tries (on the pretext of race, but really to prevent their 
competition in small businesses). The "deterioration of 
the race" within any country now means nothing less 
than the deterioration of capitalism's limited supply of 
"working-machines," its sole source of profits. Marx 
contended that this depreciation of labor was to be met 
only by the resistance of the laborer. To-day it is being 
met chiefly by the interest of capital. 



THE LABOR UNIONS UNDER STATE CAPITALISM 1 59 

Marx said : "On the basis of the present system labor 
is only a commodity like others." This also was true 
under the system of unrestricted competition and private 
capitalism that prevailed when Marx wrote. It is not 
true under State Capitalism. Labor is now being re- 
garded as a very special commodity unlike the others — or 
not as a commodity at all, but as a natural resource. If 
regarded as a commodity, then at least labor is being rec- 
ognized as the chief source of all profits — a parallel to the 
Socialist saying that labor is the source of all wealth. 
And therefore labor, as the great profit-giver, is to be 
treasured, conserved, developed, and made more and 
more efficient. 

Marx himself said that "the value of laboring power 
is determined by the value of the necessaries required to 
produce, develop, maintain, and perpetuate the labor- 
ing-power." 5 That is, this is the cost of production of 
labor-power. But there is no rigid definition of neces- 
saries. The necessaries that enable a man to do one 
kind of work will not be sufficient to enable him 
to do another. Often, by giving a man better con- 
ditions or more "necessaries," he will do more work 
and more efficient work — to a degree that will more 
than pay for the cost of the added "necessaries." This 
is "the economy of high wages." A scientifically organ- 
ized employing class or employing government will in- 
crease each man's wages and improve his conditions as 
long as the resulting increase in the value of his products 
more than pays for the cost of such improvements. And 
this process of amelioration will continue indefinitely 
whenever necessaries are cheapened and whenever new 
processes create a new demand for more efficient labor. 

The Marxian idealization of the function of labor 
unions, which gives them credit for every advance of the 
wage-earners, has finally enabled the Socialist Parties of 



l6o THE LABOR UNIONS UNDER STATE CAPITALISM 

the world to attach greater importance to labor unions, 
even when anti-Socialist, than to Socialist Parties. So 
the British unions are given half the British delegates to 
the International Socialist Congresses, the non-Socialist 
Labour Party, which is under the control of the same 
unions, half the remainder. Similarly the Australian 
Socialist Party is refused recognition by the International 
Socialist Bureau because it does not affiliate with the 
non-Socialist Labour Party — though the latter has not 
even applied for affiliation to the Bureau. The Secretary 
and Chairman of this Bureau, moreover, have recently 
succeeded in persuading the British Socialist Party to 
become a part of the non-Socialist Labour Party, in 
which it will be in a hopeless minority. Evidently the 
Socialist Parties which adopt such policies must be rather 
Labour Parties than Socialist Parties. And if they are 
not altogether Labour Parties the control of the Inter- 
national Bureau by Labour Party partizans, and of the 
International Secretariat of Labour Unions affiliated with 
it by the bitter opponents of revolutionary and inde- 
pendent unions of the unskilled, is a powerful force work- 
ing in that direction. 

Even Kautsky, the leading Socialist theorist, favors 
the Labour Party for Great Britain and the United States. 
(For the German situation see Appendices B and C.) He 
admits the fundamental fact that the trade unions of 
Great Britain "have ever separated themselves more and 
more from the mass of the proletariat, thus forming an 
aristocracy of labor and becoming a means of splitting 
rather than of uniting the masses." The obvious rem- 
edy, now being tried, of forming unions of the laboring 
masses, of aiding the laboring masses, in some instances, 
to control the older union leaders and the older unions, he 
does not seem to favor. This would obviously be all 
to the advantage of the masses, but it is opposed by the 



THE LABOR UNIONS UNDER STATE CAPITALISM l6l 

aristocracy of labor. And according to the Marxian 
view all unions are a part and an indispensable part of 
the army of labor. This theory or tactic gives the unions 
of the aristocracy of labor an economic veto, and their 
political party (the Labour Party) a political veto, over 
all the actions of the masses of labor. 

Kautsky admits that the unions in which this labor 
aristocracy works have carried on only "a scrap" of the 
struggle against capitalism, and that "this scrap is not 
always sufficient to indicate the character of the struggle." 
The truth is that these unions have excluded the laboring 
masses, have acted against the laboring masses, and have 
organized a political party the sole purpose of which, 
according to its leader, MacDonald, is to act in accord 
with the progressive wing of the capitalists. 6 Kautsky 
wrote that "a labor party in England, outside the trade 
unions, can never become a party embracing the masses." 
He should rather have said that a party acting with the 
older unions can never become a party of the masses. 7 
He even went so far as to attack the present Socialist 
Party of America as being too radical and to say that "the 
long wished-for mass party of the proletariat may be 
formed into an independent political party in the very 
near future by the American Federation of Labor." If 
this happens evidently Kautsky and the International 
Bureau will do all in their power to favor the new party. 
And it could happen either in the way Kautsky suggests 
or by the Socialist Party affiliating with the Federation 
of Labor, according to the British plan. 

We find the best-known anti-Marxian Socialist and 
advocate of the labor unionism (Sidney Webb) taking 
a similar position. The workers have to conquer "se- 
curity" and "sufficiency" by "organization from below." 
Yet we also read : 

"It is just upon the effect of these (industrial) proces- 



1 62 THE LABOR UNIONS UNDER STATE CAPITALISM 

ses and regulations on the health and comfort, on the 
development of the body and brain, on the character and 
personality, of those who are employed in the various 
industrial processes, that even the output of material 
commodities in the long run depends." 8 

If output, and therefore employers' profits, depend 
upon these regulations, upon security and sufficiency for 
the workers, why does Webb claim they can be obtained 
only by organization from below ? Obviously because he 
must make this claim if he is to maintain his contention 
that current labor union action, supplemented by Labour 
Party politics, is pushing capitalism back step by step 
and improving the conditions of labor at the expense of 
capital. If, on the contrary, all the improvements in the 
conditions of labor he mentions are being carried out by 
capital to further increase its own profits, and if to this 
process is ever to be added another process, more satis- 
factory to the masses of labor, this can never come about 
through the mere co-operation of the older unions, their 
Labour Party, and the progressive capitalists as Webb, 
the Laborites, and the Laborite Socialists propose. 



CHAPTER IX 

THE POLITICAL OPPOSITION UNDER STATE CAPITAL- 
ISM 

When the incoming regime of State Capitalism is 
fully established, will the new class alignment at last be 
drawn between those who would gain and those who 
would lose by the placing of society on the basis of equal 
economic opportunity? 

Many believe that when the program of radical re- 
form now under discussion will have been carried out, 
the issue will, indeed, be Socialism. The Socialists, who 
are divided as to whether there is or can be a political 
class-struggle between labor and capital to-day, as a rule 
believe that this struggle will surely begin when political 
democracy will have been established and the growing 
partnership of capitalists and government will have made 
the nature of the present society visible to all eyes. 

Though the Socialist Parties are unable to do anything 
Socialistic at the present time, why do they not have some 
concrete Socialistic plans ready, then, for extension of the 
reform program in the Socialist direction after the pro- 
gressive capitalists will have gone as far as they are 
likely to go? 

The abstract formulations of the preambles of Social- 
ist programs cannot, in the nature of things, shed much 
light upon such a practical question. These abstract 
formulas have already been subject to the most diverse 
and contradictory interpretations. A great Socialist 
leader, Liebknecht, has said that differences based on 

163 



164 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

such theoretical considerations are unimportant. And 
Liebknecht's view is now so generally accepted by So- 
cialists that even to refer to these abstractions in prac- 
tical situations is likely to bring forth the charge of 
Utopianism. We must judge the Socialists' position, 
then, by the only thing that really holds the various fac- 
tions together, the concrete program they possess in com- 
mon. It is true that many Socialists of varying schools 
believe, on the contrary, that they are held together only 
by the "ultimate goal," and that the only thing that dif- 
ferentiates the Socialist Parties from other parties is this 
"final aim." But this merely means that those who hold 
these views believe that, in reality — as apart from ab- 
stract ideals and opinions — there is no common Socialist 
principle, either to hold Socialists together, or to distin- 
guish Socialist parties from other parties. 

If there is now in the process of formation a political 
class-struggle which may be expected to break out un- 
der State Capitalism, it must be found in those concrete 
proposals of the Socialist programs that look beyond the 
immediate present. We must find measures or policies 
opposed alike to State Capitalism and to State Socialism, 
for these only are distinctively Socialistic. 

The majority of Socialist authorities seem to agree 
that the present Socialist Parties have no distinctively 
Socialistic measures or principles in view. Some claim 
that a reform of the progressive capitalists, when viewed 
from the angle of the Socialist ideal, or when regarded 
"as part and parcel of a future Socialism," becomes So- 
cialistic. Others say, "We may view every public issue 
and policy as either making for Socialism or away from 
it. In the first case it is a Socialistic policy, in the second 
it is not." * 

According to this view practically all the reforms of 
progressive capitalism are "Socialistic." Others say that 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 165 

it is "the tone that makes the music" or that while the 
programs read the same there is a difference in the fact 
that the Socialists alone are "the movement of the work- 
ing class." 2 This is also an admission of a belief that 
there is no concrete distinction between the program of 
a Socialist Party and that of other parties. 

Kautsky admits that nearly all, if not all, the "practical" 
demands of the Socialists are to be found on the pro- 
grams of other parties. But he claims that the particular 
combination of demands to be found in the Socialist pro- 
gram is peculiar to the Socialists in that it is not to be 
found in the program of any other one party. 3 Jaures 
makes the same admission, but his way of stating the dis- 
tinction is to say that the Socialists only stand for a com- 
plete program of reform (la reforme glohale). 

A far more logical and more frank analysis is made by 
the American Socialist leader, Morris Hillquit, in his re- 
cent articles, Socialism Up-to-Date (now published in 
book- form under the title, Socialism Summed Up) . As 
this went to press largely after the formation of the new 
Progressive Party, an organization in several respects 
more radical than any previous non-Socialist Party in 
this country or Europe, Hillquit felt obliged, in the latter 
half of his work, to sharpen the traditional distinctions 
between the two movements — especially as their pro- 
grams were in many points identical. 

Hillquit's new volume is perhaps the most able and 
valuable statement yet published of the present political 
philosophy and tactics of the Socialist International. To 
say that it should be read critically is to take nothing 
from its value, for it is frankly a partizan plea. It is, 
however, no mere repetition of thread-bare formulas, 
either of theory or of tactics, but bears the marks of 
having been newly thought-out and thought-through by 
the author. 



l66 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

Several of Hillquit's generalizations, though in entire 
accord with the revolutionary traditions of the Socialist 
movement, seem new to-day because they had been so 
largely suppressed during the many years when, in the 
absence of genuinely radical parties in this and other 
countries, many Socialists wanted the Party to give al- 
most its entire energy to such reforms as the progres- 
sives are now adopting, and so in every practical question 
denied the distinction between Socialism and progressiv- 
ism. At the present juncture therefore some of Hill- 
quit's propositions have the same effect as if they were 
new and so are extremely important. I shall begin with 
the most fundamental. 

"Socialism aims at the destruction of all economic 
privileges and all class rule. The Socialists contend that 
the realization of their program will ultimately benefit 
the entire human race, but they frankly recognize that 
its immediate effects will be damaging to the beneficiaries 
of the present order and advantageous to its victims. In 
other words, Socialism necessarily involves an immediate 
material loss to the capitalist classes — amd a correspond- 
ing gain to the working classes/' (My italics.) 

After giving us this clear and frank criterion, by which 
alone we can distinguish a Socialist policy from that of 
other parties, Hillquit admits, with Kautsky and the best 
authorities, that the present Socialist program is not 
built on this principle at a single point: 

"The separate practical measures advocated by the 
Socialists are often trivial in comparison with the lofty 
ultimate aim of the movement. Some of them may even 
occasionally be found duplicated in the platforms of other 
political parties. Not one of them, standing alone, has 
a distinctive Socialist character. But, taken in its en- 
tirety, the Socialist platform presents a striking and radi- 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 1 67 

cal departure from the platform of all other political 
parties, and bears the unmistakable imprint of the So- 
cialist thought and endeavors." 

The conclusion that a program so composed may be 
Socialistic is inadmissible, after the sentence I have itali- 
cized. If the radical wing of the Progressives, for ex- 
ample, has 50 per cent of the Socialist measures, and the 
radical wing of the Democrats another 50 per cent, is it 
not both possible and probable that they may unite and 
represent 100 per cent of the Socialist program? They 
would then leave only its abstract phrases, or doubtless 
would appropriate these also, as they are already doings — 
with certain new interpretations, of course. Or if such a 
party is not formed in this way, may it not be formed in 
a hundred other ways, for example, as the "Labor" 
Party of Australia was ? 

Indeed, Hillquit in this last paragraph practically pro- 
vides us with an entirely different criterion, that a pe- 
culiar combination of measures, not one of which is 
Socialistic, may yet make up a Socialistic whole. 

Hillquit also furnishes another standard equally typical 
of the leading Socialist writers : 

"Neither a city administration nor a state govern- 
ment is capable of reorganizing the important national 
industries on a basis of collective ownership. A Social- 
ist commonwealth can be established only through co- 
operation of all departments of the national and state 
governments. In other words, the Socialists must be in 
full political control of the country, before any part of 
their ultimate social idea can be materialized." (My 
italics. ) 

That is, no program can be Socialistic unless it is car- 
ried out by Socialists. This new and radical criterion 



1 68 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

destroys completely the second one just given. For 
according to this statement, even if all the reforms now 
"demanded" of capitalist progressives by Socialists were 
carried out, including that peculiar combination of ad- 
mitted non-Socialist reforms that Hillquit calls Socialis- 
tic, we should still have failed to materialize "any part" 
of the ultimate Socialist idea. 

Hillquit endeavors to pass over this difficulty by pro- 
viding still another distinctly different criterion: 

"The test of the practical achievements of the Socialist 
movement is therefore not whether Socialism has already 
been realized in parts or in spots, but whether the move- 
ment has made a substantial advance in the task of creat- 
ing social and political conditions favorable to the intro- 
duction of the Socialist commonwealth." 

This is no criterion at all. All progressive laws, all 
inventions, all industrial progress, all the fundamental 
tendencies of our civilization supposedly prepare the way 
for Socialism. Therefore Socialists favor all forms of 
progress. But Socialists are very minor factors in bring- 
ing such progress about. And when they take, as their 
test of practical Socialist achievement, the Socialists' con- 
tribution to general progress they abandon their claim 
that Socialism brings a new, distinctive, and revolution- 
ary change in society. Hillquit speaks of factory legisla- 
tion (that of Peel, for example) as being of this progres- 
sive character and preparing the way for Socialism. This 
is true. But he then goes further and refers to such prog- 
ress to-day as an achievement of Socialism. This is not 
true. For Peel's laws were passed before Socialism was 
heard of as a practical force in England, and much sim- 
ilar legislation has been effected recently, in several coun- 
tries, without any considerable Socialist influence. 

Hillquit insists on applying the term "Socialistic" to all 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 1 69 

progressive measures which happen to be endorsed by So- 
cialists. While he does not yet attribute all present prog- 
ress directly to Socialist initiative he suggests that So- 
cialism is already, indirectly, its chief cause. 

"The true task of Socialism, the work of rebuilding the 
economic and political structure of modern society on the 
lines of the ultimate Socialist program, will begin only 
when the Socialists will have the full political control of 
the government, and in the meantime they are content 
with the role of torchbearers of the new civilization, 
always formulating larger social claims, always forcing 
the next step in social progress. The concrete reforms 
which the organized Socialist movement has thus indi- 
rectly gained and is still constantly gaining by its mere 
existence and growth are probably more numerous and 
substantial than the actual achievements of all other 
so-called 'practical' reform movements combined." 

Indirectly, then, the Socialists are already in power 
and it is they who are preparing the way for Socialism 
rather than the economic forces of the time. 

Still, Hillquit makes a few invaluable practical distinc- 
tions along lines long established by the German Party. 
As to the very crucial question of government owner- 
ship, Hillquit performs the very great service of destroy- 
ing completely the misconceptions created by ex-Con- 
gressman Berger and others in this country, as well as 
British Socialists of all parties : 

"Socialists," Hillquit writes, "entertain no illusions 
as to the benefits of governmentally owned industries 
under the present regime. Government ownership is 
often introduced, not as a democratic measure for the 
benefit of the people, but as a fiscal measure to provide 
revenue for the government or to facilitate its military 
operations. In such cases government ownership may 



170 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

tend to strengthen rather than to loosen the grip of 
capitalist governments on the people, and its effect may 
be decidedly reactionary. Similarly, government owner- 
ship is often advocated by middle-class 'reform' parties 
for the main purpose of decreasing the taxes of property 
owners and reducing rates of freight, transportation and 
communication for smaller business men. 

"The Socialists advocate government ownership pri- 
marily for the purpose of eliminating private profits from 
the operation of public utilities, and conferring the bene- 
fits of such industries on the employees and consumers. 
Their demand for national or municipal ownership of 
industries is always qualified by a provision for the demo- 
cratic administration of such industries and for the appli- 
cation of the profits to the increase of the employee's 
wages and the improvement of the service. Further- 
more, it must be borne in mind that when the Socialist 
platform declares in favor of government ownership of 
certain industries, the Socialist Party at the same time 
nominates candidates for public office pledged to carry 
out these measures in the spirit of that platform. In 
other words, what the Socialists advocate is not govern- 
ment ownership under purely capitalist administration, 
but collective ownership under a government controlled, 
or at least strongly influenced, by political representa- 
tives of the working class." 

With one important omission (which we may supply 
from Kautsky's Class Struggle, p. no) this is an excel- 
lent and an adequate statement. Kautsky's principle, 
however, is more important than all the rest of Hillquit's 
statement put together. It is as follows : 

"If the modern state nationalizes certain industries, it 
does not do so for the purpose of restricting capitalist 
exploitation, but for the purpose of protecting the capital- 
ist system and establishing it upon a firmer basis, or for 
the purpose of itself taking a hand in the exploitation of 



POLITICAL OPPOSITION UNDER STATE CAPITALISM I7I 

labor. As an exploiter of labor, the state is superior to 
any private capitalist. Besides the economic power of 
the capitalists, it can also bring to bear upon the ex- 
ploited classes the political power which it already 
wields." 

There could be no greater contrast than that between 
Hillquit's and Kautsky's position and Berger's repeated 
statements referring to the Post Office as an example of 
Socialism. For instance, take Berger's statement in the 
American Magazine in 1912 : 

"Whenever the nation, state, or community has under- 
taken to manage and own any large industry, railroad, 
mine, factory, telegraph, telephone, mill, canal, etc., this 
invariably redounded to the benefit of the commonwealth. 
Business will be carried on under Socialism for use and 
not for profit. 

"This is the case now in the post-office, public school, 
waterworks, etc. — wherever owned and managed by the 
people." (My italics.) 

The whole case for Socialism, on the contrary, hangs 
on the fact that the post office and the government are 
at present nowhere owned and managed by the people 
as a whole and certainly are in no considerable degree 
managed by the masses of wage-earners. Hillquit's clear 
Statement of this fact is most timely and serviceable, 
though it is only a repetition of a truth accepted by So- 
cialists generally for nearly half a century. 

Berger is largely justified, however, by the 19 12 plat- 
form of the American Socialist Party which was made 
before that of the Progressives. So alike are the two 
indeed that he and many other leading Socialists claimed 
that the Progressives had "stolen the Socialist thunder." 
Certainly the Socialist platform did not go any further 
than Roosevelt's unqualified phrase that "the people' ' 



1J2 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

should "control industry collectively." (See the follow- 
ing chapter.) Certainly there will be no political class 
struggle between two parties, if their chief difference is 
the question as to which advocated their common pro- 
gram first. 

Leading British Socialists have long denied that there 
is, or that there is likely to be, any class-struggle or fun- 
damental difference between Socialists and progressive 
capitalists. The very moderately Socialistic Independent 
Labor Party is a branch of the non-Socialist Labour 
Party. J. R. MacDonald now wants the latter to become 
a part (it would surely be a minor part) of a larger 
radical party. 4 Bernard Shaw is equally explicit. "The 
unity of Socialism, and the existence of definite bound- 
ary lines between it and Progressivism," he contends to 
be "mere illusions." 5 It is indeed true that that State 
Socialism for which Shaw speaks, in the name of the 
middle classes and those that enjoy educational privilege, 
cannot be definitely distinguished from radical progres- 
sivism, and has little "unity" with the Socialism of the 
mass of wage-earners. And the same is true of the State 
Socialism of "the aristocracy of labor" represented by 
MacDonald. 

But why should such State Socialist reformers insist 
that they represent also the mass of the workers ? First 
of all, obviously, to get the latter's political support. But 
they claim to be Socialists also in order to utilize the 
idealism of the masses for the purposes of the move- 
ments they represent, an intention that may be most 
clearly seen in MacDonald's advocacy of "immediately 
practicable changes, justified and enriched by the fact that 
they are the realization of great ideals." Thus the whole 
of the great ideal enters into each reform, embodies itself 
in it. Instead of regarding the immediately practicable 
change as pointing forward to greater things, this "So- 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 1 73 

cialism" reverses the process and satisfies its ideal in 
whatever reform happens to be immediately attainable. 

Other Socialists view their party as being shaped by 
its competition with other parties, and so compelled to 
rival them in present achievement. These say, with A. 
M. Simons: "If we leave the field of achievement to 
the reformer, then it is going to be hard to persuade 
people that reform is not sufficient." There is here no 
effort to claim reform as being Socialistic. But Socialists 
are to claim the chief credit for obtaining reforms. This 
is mere partizanship. For if there is ever to be a political 
class-struggle it is because power to achieve and achieve- 
ment are at present in the hands of one class, and will 
pass into the hands of another only after a severe 
struggle. 

But many representatives of the laboring masses also 
(not mere partizan Socialists) have believed that the 
politically organized working-class, even under present 
conditions, could institute a political class-struggle. 
This belief may be accredited to certain widespread 
fallacies. One such fallacy is that a minority party, 
representing a social extreme, may hold the balance 
of power. But it can do this only if the other two parties 
are about equally conservative and then only on minor 
issues — for such parties will unite against the Socialists 
on all larger questions. If one of these other parties is 
considerably more liberal or considerably less reactionary 
than the other, the Socialist minority will be forced to 
unite with it on every crucial question — when it is not 
forced to vote against both other parties. 

A good example of this fallacy may be seen in a recent 
editorial from the Metropolitan Magazine : 

"It would not be difficult to build up a Socialist Party 
in Congress and in the state legislatures which might 
often hold the balance of power, just as the labor party 



174 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

in England now holds the balance of power, and so force 
legislation which would advance the cause of freedom 
without the miseries of actual strikes." 



If, as now seems highly probable, we come to have a 
Conservative and a Radical party in the United States, 
as in other countries, the Socialists would have to vote, 
on every important occasion, either for the Radicals or 
against both the other parties. In either case the Radi- 
cals and not the Socialists would hold the balance of 
power. 

Another similar fallacy is the belief that, when any- 
thing is done by a government which happens to benefit 
labor, it is done out of fear of Socialism. I have shown, 
in previous chapters, an entirely different motive for 
many radical labor reforms. But it might be said that 
some of these measures, at least, however broadly we 
may view them, cost capital more than they bring in. If 
this is true of some rare and exceptional reforms, it cer- 
tainly has not been true and will not be true of the whole 
program of any administration or of any legislative ses- 
sion in which capitalists predominate (whether small or 
large capitalists). Debs, for example, claims that Bis- 
marck brought in his workingmen's insurance laws in 
order to thwart Socialism. Yet Socialism was no menace 
in Germany at that time, if it is to-day. Bismarck may 
have spoken of it as a menace in order to frighten the 
Liberals and deprive them of an ally, and also to persuade 
the extreme reactionaries to consent to his reforms. (See 
Appendix B.) As usual the cries of "impending revolu- 
tion" came from the reactionary camp. And it is a 
grave illusion when Socialists have taken them seriously. 
If there should be any partial "concession" to Socialism 
in the near future it will only be to serve as a cloak to 
hide the continuation of other and greater privileges, 



POLITICAL OPPOSITION UNDER STATE CAPITALISM IJS 

which, in spite of the one sacrificed, will continue to carry 
us in the opposite direction from Socialism. 

We have many recent instances of the use, by skillful 
politicians, of this Socialist bogey — for it is a bogey, since 
the fact that Socialism may become a menace a genera- 
tion later does not make it a menace to-day. For ex- 
ample, capitalistic groups whose interests are in favor of 
peace "threaten" a Socialist general strike in case of war, 
though they know there is little chance of such a strike. 
And both radicals and conservatives threaten one another 
with a Socialist revolution, if some forward or backward 
step they desire is not taken. Only a small part of the 
general public and the ignorant part of the Socialists are 
deceived by such talk. The only people menaced by 
the growth of political Socialism to-day are the political 
leaders of petty capitalist factions, some of which this 
growth often threatens or destroys. But all those politi- 
cal leaders who represent capitalism as a whole, or its 
progressive wing, know they have nothing to fear for a 
number of years to come. 

The chief reason, however, why the majority of So- 
cialists have settled down to the belief that all progress 
that reaches the masses is due to victories of labor in the 
class-struggle is that they have totally failed to evolve 
any rational view of capitalistic progress. It was far 
easier for the Socialists to get votes by painting the capi- 
talist as "the devil" as Bernard Shaw says they did. 
The bitter partizan struggle in which they have been en- 
gaged against various groups of capitalists, led them to 
the view that the only cure for any of the evils of capital- 
ism was its diametrical opposite, Socialism, that there 
was no progressive wing of the capitalists (even in a 
restricted sense of the word progressive), that there was 
no intermediate period between the existing domination 
of the large capitalists and Socialism. Thus, consciously 



I76 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

or unconscior.sly, for the partizan purpose of getting more 
votes, they ignored both the division in the ranks of capi- 
tal that produces State Capitalism and the division in 
the ranks of labor that produces State Socialism. Surely 
a short-sighted proceeding, as these State Capitalists and 
State Socialists, who have been attracted by this policy 
into the Socialist movement, are bound to leave it as soon 
as State Capitalist or State Socialist Parties are formed, 
or at the latest when they come to control the govern- 
ment. 

Leading Socialists have been teaching their followers to 
look in exactly the opposite direction to that which 
progress is actually taking. Kautsky, for example, speaks 
of the "political bankruptcy of the small capitalists and 
farmers" at the very time when these classes are coming 
into power and bringing about a revolution, within the 
bounds of capitalism, so profound that even unskilled 
labor is getting some part of the benefit. And he speaks 
of the political maturity of the workers at the very time 
when they are becoming more and more clearly depend- 
ent for all immediate results on co-operation with small 
capitalist elements. (See Chapter XIII, and Appendix 
C.) Thus not only has blind partizanship led the best 
known Socialist leaders to a course that is bringing them 
to a blind alley — but they totally and continuously misin- 
terpret every important feature of the present political 
situation. This purblind and self-defeating partizanship 
is briefly summed up in a recent article by Kautsky (on 
the present situation in the German Reichstag) in which 
he generalizes about non-Socialist parliaments: 

"No bourgeois majority, no matter what its compo- 
sition may be, will ever conduct an energetic struggle 
against the government in behalf of a genuine parlia- 
mentary regime, against militarism and the increase of 
the naval forces, and for radical social reforms. Such a 



POLITICAL OPPOSITION UNDER STATE CAPITALISM IJft 

struggle can to-day be expected of a Social-Democratic 
majority only. 

"Nowadays it is impossible to make up a Reichstag, or 
any parliament, in such a way as to make it capable of 
effecting great social and democratic reforms in the ab- 
sence of violent pressure from without, unless the ma- 
jority is composed of Socialists. The proletariat can no 
longer expect anything from any bourgeois party." 7 

Yet radical social reforms, of great and lasting benefit 
to labor, are being enacted in Great Britain, America, and 
Australia, without any Socialist pressure of great impor- 
tance. And not only in America and Great Britain, but 
in several other countries, the capitalistic anti-military 
party is getting stronger every day, and already outvotes 
the Socialists in many parliaments. 

Kautsky's reasoning is based on present German condi- 
tions and is drawn in large part on arguments taken 
from Marx's Capital (1869) and from the language 
Kautsky used in his Erfurt Program, written in 1892 — as 
he confesses in a recent article. And the German Party's 
stand justifies him, for there is still no revision of this 
program, though it dates from 1891. We have since 
passed through a quarter century of by far the most rapid 
economic and political evolution of all history, but Kaut- 
sky admits having learned little or nothing of funda- 
mental political importance in all this time. He still in- 
sists on the theories of the Erfurt Program : "the grow- 
ing increase of the uncertainty of existence, of misery, of 
oppression, of enslavement, of degradation, of exploita- 
tion." 8 The only part of this statement that either cor- 
responds to the facts of to-day or is in any way essential 
to the Socialist position is that "exploitation," or total 
profits compared with total wages, continues to increase. 

Kautsky's position is that of Bebel and of the majority 
of representative Socialists. It misconstrues the whole 



I78 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

position of the more far-sighted and scientific wing of 
the capitalists, now coming into control. These Social- 
ists, whose whole revolt is against the attitude of present 
society to labor, do not even know what the attitude of 
the present society to labor is. That this error, probably 
the most fatal ever made by any group of public men, 
is due neither to any special lack of intelligence, nor to 
any lack of devotion to their cause, can be testified by 
anyone familiar with the lives and work of the Socialist 
leaders. It must be traced rather to the fact that they 
belong to a past generation. Their truths were true — 
at one time. If their dogmas now survive at all this is 
due to the inevitable traditionalism and rigidity of an 
ultra-popular propaganda. But it is due still more to the 
highly artificial discipline by which the conflicting ele- 
ments of the Socialist Party have been held together. 
In order to keep together in one party, a part of the small 
capitalists, the aristocracy of labor, and the masses of 
wage-earners (State Capitalists, State Socialists, and So- 
cialists), Kautsky and Bebel and the Party Machine 
had to be given a very large measure of authority. So 
that it is not surprising that these two were even referred 
to as the theoretical and the political popes of the 
Party. 

Kautsky is totally ignorant of the labor policy of the 
capitalist progressives. He does not dream that the con- 
ditions of labor are to be made better and better — with- 
out cessation — in order that profits may become greater 
and greater. Indeed, he still clings, with a very large 
part of the Socialists, to the opposite view : 

"In general wages must be high enough to keep the 
workingman in a condition to work, or, to speak more 
accurately, they must be high enough to secure to the 
capitalist the measure of labor-power which he needs. 
In other words, wages must be high enough not only to 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 1 79 

keep the working-men in a condition to work but also in 
a condition to produce children to replace them." 9 

Wages must be higher than this in order to satisfy the 
new capitalist requirements. They must bring the laborer 
to that degree of efficiency and to that position in industry 
where he can render the most profits. More and more 
will be spent on him as long as his output increases still 
more rapidly than such expenditures. There is a tempo- 
rary limit to this process, but this limit is constantly 
raised with the advance of the technique of industry. 
Kautsky still believes — as he did nearly half a century 
ago — that the tendency is in the opposite direction : 

"Now industrial development exhibits a tendency, most 
pleasing to the capitalist, to lower the necessities of the 
workingman and to decrease his wages in proportion. 

"There was a time when skill and strength were requi- 
sites for a workingman. The period of apprenticeship 
was long, the cost of training considerable. Now, how- 
ever, the progress made in the division of labor and the 
introduction of machinery render skill and strength in 
production more and more superfluous ; they make it pos- 
sible to substitute unskilled and cheap workmen for 
skilled ones." 10 

The old all-round trade skill, it is true, has almost dis- 
appeared. But in the place of a hundred specialized lines 
of work that have gone, industrial evolution and scientific 
management are introducing a hundred thousand new 
specialties. The new specialized ability may not be called 
skill, since it is gained by experience and needs no long 
continued instruction or apprenticeship, but it demands 
highly trained faculties and a high degree of effort. And 
it pays, as all scientific managers agree, to pay such serv- 
ices well. Labor is not becoming cheaper and lower 
paid. It is becoming cheaper and higher paid. 



l80 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

"Working-men are cheap," says Kautsky, "but large 
airy work-shops are dear." It may be doubted if this 
proposition was ever true, if looked at from the point of 
view of the interests of the employing class as a whole, 
and from generation to generation. And certainly it is 
becoming the very reverse of true to-day, now that the 
individual employers (except the most backward), be- 
cause of new conditions, are coming to regard things 
from the class standpoint. 

An excellent motto for the labor-policy of State Capi- 
talism would be the reverse of the Kautsky formula.. 
We may now say: "Working-men are dear, but large 
airy work-shops are cheap." For the capitalist class as 
a whole and in the long run (if profits are to be steadily 
increased) this undoubtedly holds true. Only a few lines 
below the passage just quoted Kautsky himself supplies 
one of the chief reasons why this is the case. If the ex- 
pensive modern machinery "is not used to its full capacity 
it will bring loss instead of profit to the capitalist." 
The scientific exploitation of expensive machinery at high 
speed, without stops, and without waste of material or 
product, requires a larger and larger proportion of expen- 
sive labor. A worker who is even a small degree better 
than the average is worth much more than the average 
— if he can save even a very little of the time of these 
expensive machines. 

This complete failure to comprehend the progressive 
capitalist policy leads Kautsky to suppose that all impor- 
tant legislation of benefit to labor must be opposed by 
all capitalist parties and can be secured only by labor 
pressure : 

"For any important measure, the eight-hour law, for 
example, there will be found few supporters among the 
property-holding class. 

"The property-holding politicians who are advocating 



POLITICAL OPPOSITION UNDER STATE CAPITALISM l8l 

the modern measures are moved, not by philanthropy, but 
by the necessity of yielding to their working-class con- 
stituents. The struggle for labor legislation is becoming 
more and more a class struggle between proletarians and 
capitalists. On the continent of Europe and in the 
United States, where the struggle for labor laws com- 
menced much later than in England, it bore this charac- 
ter from the start. The proletariat has nothing more to 
hope for from the property-holding classes in its endeavor 
to raise itself. It now depends wholly upon its own 
efforts." " 

History has totally disproved these assertions. (See 
above— Chapter III.) 

Kautsky himself cannot always keep to such obviously 
unfounded positions : 

"For poverty is a source of danger to the whole social 
fabric; it breeds pestilence and crime. Accordingly, a 
few of the more clear-headed and humane among the rul- 
ing classes are willing to do something for the working 
class; but to the bulk of them, who neither dare nor can 
afford to break with their own class, the problem- can no 
longer be that of the abolition of the proletariat. At 
best they cannot go beyond the elevation of the prole- 
tarian. The proletariat is by all means to continue, able 
to work and satisfied with its condition." 12 

It is rather extraordinary that Kautsky here makes 
"the abolition" of the proletariat synonymous with "do- 
ing something" for the proletariat. There certainly is no 
sign whatever that any number even worth mentioning of 
the ruling-classes favor the former move, for to abolish 
the proletariat would be to abolish profits and privilege. 
But when it comes to the abolition of poverty and in- 
dustrial inefficiency, and so "doing something" for the 
working class, not only do a few of the ruling classes 



1 82 POLITICAL OPPOSITION UNDER STATE CAPITALISM 

favor this but probably already a majority. It is to the 
interest of the whole class, as Kautsky himself suggests, 
to abolish pestilence and crime. But this is only the 
lesser and negative side of the problem. The program 
of labor reform which the progressive capitalists have 
set before themselves means something more positive, the 
abolition of industrial inefficiency. 

Indeed the anxiety of Kautsky and Bebel to show that 
there already exists a class-struggle between the ruling- 
classes and the laboring masses makes them frequently 
claim the State Socialist movement against private capi- 
talism as part of the Socialist struggle, although they 
usually make a clear distinction. Bebel, for example, 
set Socialism over against "the bourgeois individualistic 
system," 13 thus leaving the reader free to suppose that 
he has nothing against the bourgeois State Socialist sys- 
tem. He did this unquestionably because in reality the 
only concrete class struggle of to-day is that of the small 
capitalists against individualistic capitalism. 

As Bebel, like Kautsky, denied any future social func- 
tion whatever to the small capitalists, he must allot the 
bringing about of State Socialist and even State Capitalist 
reforms to the working-classes. A place is specifically 
provided for these reforms within the Socialist program, 
as an inevitable result of the fact that the Socialists 
left them no place outside of the Socialist movement. 
Extreme partizanship has thus led to the extreme of 
party compromise, not through bringing about a reaction 
against partizanship, but by the inevitable logical develop- 
ment of the partizans themselves until they have reached 
a Jesuitical position. 

Bebel assumed that in modern society "a handful of 
monopolists become the masters of society." 14 If this 
were the case then, indeed, the present struggle against 
the plutocracy would combine into one harmonious whole 



POLITICAL OPPOSITION UNDER STATE CAPITALISM 183 

the class-struggle of the Socialists against all ruling- 
classes, the fight of the State Socialists against private 
capitalism, and the struggle of the small capitalists 
against the large. Bebel regarded all the features of 
private capitalism under the present monopolistic control, 
as permanent features of all class-ruled society until So- 
cialism, thus completely confusing the movement against 
plutocracy with that against all class-rule and privilege — 
precisely as the small capitalist and anti-Socialist states- 
men do who now dominate Australia and America and 
are beginning to dominate France and England. So also 
Bebel regarded high indirect taxes, high tariffs, a rising 
cost of living and imperialism as permanent features of 
class-rule. The conclusion was unavoidable that he who 
fights against these things is, to that degree, a Socialist. 
Those Socialists, then, who contend the most strenu- 
ously that there is already a class-struggle of the laboring 
masses against the ruling-classes are the very ones to 
lose the political action of the working-people in the anti- 
monopoly movement, or, at best, to reduce it to a move- 
ment against private capitalism — instead of a movement 
against class-rule. 



CHAPTER X 

THE TRANSITION TO STATE SOCIALISM— THROUGH 

THE EXTENSION OF COLLECTIVISM AND 

DEMOCRACY 

The central feature of State Capitalism is the develop- 
ment of the small capitalist class and of its control over 
government. The central feature of State Socialism is 
the development of a class of more or less privileged 
wage or salary earners who are either employed directly 
by the ever-expanding government or owe their superior 
advantages, in some way or other, to legislation. The 
transition from the one form of society — or social policy 
— to the other depends on the relative growth of these 
two classes, and of other less important groups nearly 
related to one or the other of these classes. The com- 
ing of State Socialism will be hastened alike by any cause 
that checks the prosperity and numerical growth of the 
small capitalists and by any cause that increases the 
numbers and influence of the salaried and wage-earning 
class. 

By far the most important group of small capitalists 
is that of the agriculturists. The next most important 
element, the small shopkeepers, are increasing less rap- 
idly than in former years. The small manufacturers are 
being forced out of business in industry after industry — 
even building is being done more and more on a large 
scale. The new forms of land tax will greatly decrease 
real estate speculation, and the state will more and more 

184 



THE TRANSITION TO STATE SOCIALISM 1 85 

replace the private landlord. Another group, the rentiers, 
those who live on interest, will remain an important fac- 
tor, though its numbers will not be recruited as rapidly as 
now. 

Private capital will dominate agriculture long after it 
has been made entirely subordinate, if not abolished, in 
every other leading industry. Private ownership of ag- 
ricultural land will also be lasting, though the agricul- 
turists may prefer to invest their entire capital in machin- 
ery, cattle, and improvements and, instead of sinking 
capital in land, may be willing to pay rent to the state. 
This would provide a vast fund for the promotion of 
scientific agriculture, for roads, irrigation, drainage, 
scientific breeding of animals and plants, agricultural 
schools, the manufacture and improvement of machinery, 
the subsidizing of co-operative credit, buying, and selling, 
and of the preparation of food and other crops for the 
market. 

The basic principle of every small capitalist govern- 
ment will be to endeavor, by this nationalization of agri- 
cultural land rent, and other means, to increase the num- 
bers and prosperity of the small agriculturists. And 
there is every promise of success — for a certain period. 
First, no doubt, will come the extension of reclamation 
and irrigation, the introduction of new crops, the opening 
up of new districts by improved transportation. Then 
will come the compulsory sale of large estates and their 
division into small properties already so widely practiced 
in Europe and Australasia. And finally there will be an 
immense gain when the vast fund of agricultural land 
rent is expended in a centralized and scientific way — by 
state, nation, county, or co-operative association, and en- 
tirely for agricultural purposes — instead of going in large 
part, as at present, to idle landlords and holders of mort- 
gages. There are many ways in which this nationaliza- 



1 86 THE TRANSITION TO STATE SOCIALISM 

tion of ground rent can be brought about without disturb- 
ing agriculture or the present possessors. All taxes on 
agricultural land could be levied at first as an "irredeem- 
able mortgage." No cash would be accepted by the gov- 
ernment and it would gradually acquire ownership, when 
rent would begin. And this rent would be extremely 
low, we may be sure, under a small capitalist government, 
even though it went exclusively for agricultural purposes. 
The interest of the rest of the community, however, in- 
cluding even the rest of the small capitalists (those of 
the cities), in efficient agriculture and cheap food would 
not permit the rent to remain merely nominal for any long 
period. 

The small capitalist state will be inclined to favor the 
smallest farmer, he who gets along without any labor 
except that of his wife and family and two or three 
laborers for a few days in harvest time. But expensive 
machinery and other modern methods cannot be used 
effectively on such farms. And the small capitalist state 
wants cheap food almost as much as it wants a large 
number of prosperous small farmers. The labor of wife 
and children produces economically a few crops, such as 
vegetables and eggs. In others, such as milk, butter and 
small fruits, co-operation allows fairly efficient methods. 
But even in these instances, when the cost of the labor of 
the women and children is reckoned in on the debit, side 
of the ledger, there is less efficiency than in agriculture on 
a larger scale, while in other branches, such as grain pro- 
ducing and animal raising, the disparity is still greater. 
A considerable proportion of very large estates, it is true, 
also fail, but those of intermediate size, up to 500 and 
1,000 acres, are more and more successful. State Capi- 
talism, then, both in order to furnish cheap food and in 
order to provide a possible field of expansion and reward 
for the more successful of the very small farmers, will 



THE TRANSITION TO STATE SOCIALISM 1 87 

be prevented from limiting too narrowly the amount of 
land the state will rent to a single exploiter. 

The fact that there will surely be many moderately 
large farms limits the amount of land that will be left 
over for smaller ones. But it also has another important 
result. Agricultural labor will become more important 
as these moderately large farms become not so much 
larger as more numerous. The legal minimum or effi- 
ciency wage then in force will enable the exceptional 
laborer to make some savings and so will provide a con- 
stant influx of new agriculturists on the smallest scale. 
So many of these will clamor for land that all cannot be 
provided for. The government, to avoid being accused 
of favoritism to those already in possession, will be com- 
pelled to raise their rents to the full value of the land 
and a large proportion of those who inaugurate farms of 
their own will constantly fail. 

Also in its extension of credit and of other favors the 
government will be forced to draw a sharper and sharper 
line against the farmers of lesser efficiency, who, as a 
rule, will be those of lesser capital. It will be forced 
accordingly to discriminate against the smallest holdings 
and in favor of farmers with one or two laborers. This 
means again the relatively greater increase of somewhat 
larger farms — and another check to the effort to consti- 
tute a more numerous agricultural class. 

It also means still more laborers, and still greater diffi- 
culty for an agricultural laborer to acquire enough capital 
to become a successful small capitalist. Agriculture will 
thus sooner or later bring additional recruits to State So- 
cialism and to Socialism and cease to add to the small 
capitalist strength. When this day arrives, and, as I have 
indicated, it is not many years off, State Capitalism is 
doomed. 

The minimum or efficiency wage established by State 



l88 THE TRANSITION TO STATE SOCIALISM 

Capitalism will enable the exceptionally efficient agri- 
cultural laborer to save moderately, so that he may accu- 
mulate enough to equip a small farm, but only in excep- 
tional cases, after many years of heavy sacrifice. So 
State Socialism will have little difficulty in winning him 
over to another ambition, the possibility of higher wages 
and more rapid promotion on farms of which not only 
the land but all the capital is governmentally owned and 
governmentally operated, and on a large and scientific 
scale. Already the scientific experiment stations are 
rapidly expanding on the one side, and, on the other, mu- 
nicipalities are financially interesting themselves in the 
supply of milk and meat and in markets. Under State 
Socialism they will undertake to reduce the cost of living 
for the residents of the cities by entering into one branch 
after another of agriculture, on municipal farms. The 
employment on these national and municipal farms will 
attract not only agricultural laborers, but even small 
farmers — for not only will high wages be paid, but there 
will be some profit-sharing as well — together with an ex- 
cellent chance for promotion. And even the moderately 
large farmers and co-operators will find it more and more 
difficult both to get labor and to compete generally with 
such farms. For co-operators will prefer to share profits 
rather than merely to share expenses. Or, what is still 
more likely, the larger farmers and co-operative associa- 
tions will be driven, at first, into certain special branches, 
until, one after another, they will be automatically forced 
to retire from these also. Such a process will take decades 
for completion. But it will begin under State Socialism, 
and it will be a relatively short time after that when 
private capital will at least cease to predominate in agri- 
culture generally, though it may linger in a few branches. 
This development will be hastened by the fact that a 
low cost of living, especially in necessaries, is a basic 



THE TRANSITION TO STATE SOCIALISM 1 89 

policy of State Capitalism and still more of State So- 
cialism. Both systems are based on an effort to bring the 
masses to that maximum of industrial efficiency which the 
interest of the ruling class allows and demands. And 
under State Socialism the ruling class itself will have 
become so numerous, and the producers of necessaries 
will be in such a marked minority within it, as compared 
to the consumers, that a low cost of living will be de- 
sired by the ruling class for itself, as well as for the more 
scientific and thorough exploitation of the masses. 

Already in Australia half the voters, who only just 
now lost control over the government and may soon con- 
trol it again, are for the regulation of monopoly prices. 
And, as the high cost of living is the chief political issue, 
the demand for lower agricultural prices — which are so 
much more important in the laborer's budget than all the 
trust products together — will soon become imperious and 
ultimately will be irresistible. This may not mean the 
regulation of prices but it will mean, as I have said, a 
policy of nationalization or municipalization of agricul- 
tural land and other measures aimed to bring lower prices 
by more efficient production. And it will mean, later, an 
increasing operation of farms by city and state. 

So far in this chapter I have dealt with the rise of small 
capitalism in agriculture and its later relative decline in 
favor of collectivism. Of a corresponding effect and 
equal importance is the simultaneous rapid increase, under 
State Socialism, of collective ownership and govern- 
mental operation of industries. Under State Capitalism, 
all monopolies, all very large corporations, and all large 
scale industries will either be governmentally operated, 
or rigidly controlled as to finance, civil service, wages, 
prices, purchases and contracts. For the nature and func- 
tion of a small capitalist government is to abolish the 
power of the large capitalists, wherever it has arisen. 



190 THE TRANSITION TO STATE SOCIALISM 

But this process will still leave a large part of manu- 
facturing and commercial capital in private hands — per- 
haps even a third or a half of the total. 

Under State Socialism, however, when a low cost of 
living becomes a prime consideration to the new ruling 
classes on account of their personal expenses, as well as 
for the purpose of making labor efficient and increasing 
profits, the list of governmentally operated industries will 
be rapidly extended. Already we find that certain Labor 
Parties and also Socialist Parties that chiefly represent 
skilled labor are demanding the governmental operation 
of all socially necessary industries. According to this 
policy State Socialism will bring about the governmental 
operation of a very large part of all non-agricultural in- 
dustry and of a considerable as well as a rapidly growing 
part of agricultural industry also. 

State Socialism, however, will not operate or control 
any additional industries solely for the sake of improving 
the conditions of the labor employed. Its attitude to un- 
skilled and semi-skilled labor is similar to that of State 
Capitalism, and its new and distinctive policy of improv- 
ing the relative position and privileges of better paid 
labor can be accomplished almost as well in a privately 
owned as in a publicly owned industry. 

The fundamental changes State Socialism will bring in 
the treatment of the laboring masses will be rather in 
their more careful protection against rise of the cost of 
living and in the greater extension of communistic bene- 
fits than in any increase of wages. The advanced collec- 
tivism of State Socialism will provide the governmental 
machinery for improving public health, for example, so 
that the physical welfare of the masses will be taken care 
of at nearly every point by public services. The same or 
similar results might be accomplished by a sufficient in- 
crease of wages, and certainly the more valuable indi- 



THE TRANSITION TO STATE SOCIALISM 10, 1 

viduals among the workers could be reached in this way. 
But, from the point of view of a government that regards 
the masses of laborers as working-machines, industrial 
efficiency can be far more effectively promoted collectively 
or communistically, by free government aid, than by an 
increase of individual wages. And a government that 
operates or controls by far the larger part of industry 
will be amply able to fill such sanitary and hygienic func- 
tions efficiently. 

Communism will be widely extended under State So- 
cialism, not only to everything that pertains to health, 
out-door life, recreation, and education, but to many 
other functions. The transportation of the masses to 
work and recreation will probably be subsidized, if not 
free, instead of being used as a source of profit or of 
taxation — as it is now in those countries where the rail- 
roads are government-owned. The homes of the work- 
ers will be improved, and public reading rooms, social 
centers, and play-grounds will be provided for, as well as 
many other functions, which among the middle classes 
now take place in homes. Indeed all these tendencies are 
already well under way. But the highly developed gov- 
ernmental machinery of State Socialism, together with 
the absence of the opposing interests that now stand in 
the way, will greatly accelerate them. 

It is unnecessary to add that as long as this commu- 
nism fails to provide that higher education and training 
that is becoming more and more indispensable for all 
the more desirable positions in governmental and private 
employment, as long as it does not support the children 
of the masses throughout this training, in the same way as 
the ruling-class parents support their children, it will not 
be carrying us even in the direction of social democ- 
racy. Like the other policies of democratic collectivism 
or State Socialism, it will merely be increasing the effi- 



192 THE TRANSITION TO STATE SOCIALISM 

ciency of the minority, that is their ability to add to the 
income of the ruling majority. 

These communistic expenditures, instead of furnishing 
free of cost, services used by all alike, may in some cases 
even purvey chiefly or exclusively to the masses, and still 
their net result, for many years, may be to furnish to the 
upper class a handsome profit above their cost. This is 
the case, as I have said, with all the "labor reforms," 
workingmen's insurance, the shorter legal work-day, etc. 

There will be no tendency, under State Socialism, to 
subsidize labor, nor is there any demand for a gen- 
eral subsidy from most labor organizations — political 
parties or labor unions — since they are mostly controlled 
by the better paid workers. The object of this element, 
on the contrary, will be to increase the total of govern- 
mental profits and then to get a larger share of these 
profits for themselves. It is not necessary for this pur- 
pose to direct any legislation against the laboring masses. 
The negative policy of failing to give equal trade educa- 
tion to the children of the laboring masses is sufficient. 
The demand for skilled labor, moreover, will grow still 
more rapidly under State Socialism than at present. The 
law of supply and demand will then (i. e. under these two 
conditions) automatically advance the wages, and in- 
crease the numbers and political influence, of the skilled, 
and of other related social groups. 

There is little chance, however, that all the growing 
social surplus left over, after the payment of efficiency 
wages to the skilled, will be used up in the increase of 
their wages and salaries. Nor will it probably be squand- 
ered by the new ruling-class, the skilled and others on the 
same level, in direct or indirect subsidies to themselves. 
It will be largely re-invested. The wages of the un- 
skilled will be still further improved, more machinery 
bought, more professional and skilled labor employed, 



THE TRANSITION TO STATE SOCIALISM I93 

and a still larger surplus will remain over for further re- 
investment. The inequality between the incomes and 
opportunities of the skilled and the trained and educated 
and those of the unskilled and semi-skilled will tend, as a 
consequence of this investment, constantly to grow 
greater — except as met by the resistance of the latter 
classes as shown in later chapters (XVI and XVII). 

Thus there will be gradually established throughout 
the period of transition from State Capitalism to State 
Socialism a largely hereditary office-holding class. This 
will be done automatically and without any direct oppres- 
sion, through the exclusion of the masses from the higher 
positions by the difficulty and expense of preparation for 
civil-service examinations. And the process will almost 
seem democratic, for the governmental and other posi- 
tions that require more or less training will come to 
occupy the majority of the population. This is inevitably 
so because the new society will only reach a stable foun- 
dation when something more than half of the population 
are included among the privileged and ruling classes. 

The State Capitalism into which the more advanced 
countries are already entering is founded both on the 
privilege possessed by a number of small capitalists and 
on privileged training. State Socialism, the first begin- 
nings of which we are also witnessing, is based on one 
privilege alone — that of a special and expensive training. 
All other undemocratic features of society, all other in- 
equalities and all the other economic injustice except this, 
the greatest of inequalities and the worst injustice, will 
disappear. 

Society will be governed by those who follow certain 
occupations. This does not necessarily mean that only the 
professional class and the skilled alone will be favored. 
It may happen that the workers of whole industries will 
be given special advantages and included among the gov- 



194 THE TRANSITION TO STATE SOCIALISM 

erning-class. Thus the railroads, as I have noted, are of 
such basic and strategic importance that, if a majority of 
their employees should strike, together with the great 
mass of wage-earners, the whole social system might be 
endangered. There are already evidences, therefore, that 
the great majority of railway workers — including many 
workers of comparatively little skill, will be given favored 
treatment. Probably only the very least skilled, like sec- 
tion-hands, will be excepted from this policy, since they 
alone are incapable of doing great harm in a strike. 

The addition of this new industrial aristocracy of labor 
to the older trade aristocracy is being much hastened by 
the so-called "syndicalist" demand that the railways 
should be governed by the railway workers. Of course 
this is not intended to be taken literally, as the railways 
are the veins and arteries of society. But it does mean 
a demand of the wage-earners for better conditions and 
more power by industry. In most industries this demand 
will be little heeded, but in a few, such as the railways, 
not only may conditions be improved, but employees may 
be given more and more voice in the management. This 
will be considered as a sort of insurance by the governing 
classes. 

Certain favored industries may even adopt profit-shar- 
ing arrangements, by which the government leaves a part 
of the profits to the employees, to be divided unequally 
among the various trades in much the same proportions 
as wages are divided now. Already governments allow 
the wage-increases of railroad employees to be shifted 
onto the shoulders of the rest of the community — which 
amounts to an automatic form of profit-sharing. And, 
indeed, many of the best known labor union contracts 
are of this character. The industrial unions concerned 
are perfectly aware that their wage increases are ob- 
tained, not from profits but from the higher prices 



THE TRANSITION TO STATE SOCIALISM I95 

charged the whole community, and that they are there- 
fore paid in large part by other wage-earners. If there 
is an occasional contract that does cut into profits it is 
easily violated by the employers' association, the employ- 
ing trust or the employing government, through discrim- 
inations against unionists, shut-downs, and similar meth- 
ods. The same groups of wage-earners which are most 
successfully co-operating with employers at the expense 
of the masses to-day will belong to the privileged ruling- 
class majority of State Socialism — and will continue to 
thrive at the expense of the laboring masses and the other 
less fortunately placed social classes. 

Collectivism and political democracy cannot be held 
within the confines of a small capitalist society. The 
momentum of their growth will break the bounds of 
State Capitalism and convert it into State Socialism. 
But no matter how far collectivism and political democ- 
racy may go they cannot of themselves bring us to Social- 
ism. They may, however, initiate a process which, if con- 
tinued, will accomplish this result. And their tendency 
to do this is the subject of the following chapter. 



CHAPTER XI 

THE TRANSITION TO STATE SOCIALISM— THROUGH 

THE EXTENSION OF THE PRINCIPLE OF 

CLASS-STRUGGLE 



The present class struggle against the large capitalists 
is gradually evolving into a class struggle against all capi- 
talists. And both the economic and the political reforms 
which now chiefly serve the interests of small capitalists 
are beginning to be extended to serve rather the interests 
of certain of the upper layers of the non-capitalists, 
namely, the more skilled wage-earners and the more ex- 
pensively trained of the professional and salaried classes. 
The change from State Capitalism to State Socialism 
will be even more revolutionary than the change now 
going on from Competitive to State Capitalism, because 
it will alter the foundation of present society — a founda- 
tion that is being left intact by State Capitalism. That 
is, it will abolish capitalism, or the rule of capitalists in 
government and industry. And, with this fundamental 
change, the whole of the superstructure of civilization — 
economic, political, social, and cultural — will also be 
revolutionized. 

But, while this change will be revolutionary, it by no 
means necessitates a revolution — in the ordinary sense of 
the term. There need be nothing sudden or violent about 
it, as the skilled workers and the other social groups 
mentioned are very gradually forcing their way into the 
majority in one place after another by means of the ballot, 
and through the evolution of industry, which continually 

196 



THE TRANSITION TO STATE SOCIALISM ICj? 

increases their numbers as well as the relative impor- 
tance to society of the economic function they perform. 

The present tendency often appears to be in the op- 
posite direction, that is, there often seems to be an in- 
crease of the relative power of the small capitalists. But 
industrial evolution is bound soon to reverse this. Stew- 
art and Rossignol note both these opposing tendencies in 
their "State Socialism in New Zealand" : 

"The land legislation of New Zealand, though appar- 
ently Socialistic, is producing results directly opposed to 
Socialism [i. e., to State Socialism], by converting a lot 
of dissatisfied people into staunch upholders of private 
property. The small farmers then are breaking away 
from their former allies, the working people of the towns, 
who now find themselves in the minority, but who are 
increasing in numbers, and who will demand, sooner or 
later, a larger share in the product of industry as the 
price of their loyalty to capitalism. " The authors fail 
to note, however, that it is not at all necessary that the 
interest of all the workingmen of the towns should be 
consulted. The new majority may be made up as effect- 
ively, and far more economically, from the small capital- 
ists' standpoint, by gradually admitting to power, one 
after another, a few of the upper layers of the working- 
men only. For a time, at least, this will assure the loyalty 
of these groups of workingmen to a semi-capitalist 
ruling-class, of which they will become a part. But it will 
not permanently assure their loyalty to State Capital- 
ism. For, as government ownership and the scientific 
organization of industry make them a more and more 
important part of society, they will use their balance of 
power — situated as they are between the small capitalists 
and the masses of the wage-earners — to establish a society 
in which they are the basic and central party, namely 
State Socialism. The small capitalists will not be plun- 



I98 THE TRANSITION TO STATE SOCIALISM 

dered in this new stage of progress, but they will lose 
more and more of the control of their property until 
they also become direct dependents on the State. They 
will remain a part of the ruling class, but will not be in 
a position superior to favored groups of government 
employees or the professional classes. 

The process is being considerably hastened by the fact 
that the ranks of the small capitalists are being more and 
more overcrowded. As the small capitalist State increas- 
ingly aids and subsidizes small capitalist producers, their 
numbers will be more and more augmented from the 
upper layers of the working class — and other social 
groups on the same income level. This in itself will 
bring the two classes closer together. But, above all, it 
will greatly augment the number of small capitalist fail- 
ures and bankruptcies. The government can increase 
the numbers of the small capitalists, but it cannot prevent 
overcrowding in exact proportion as it favors them. 
That growing number of small capitalists who are al- 
ways threatened by failure will welcome State Socialism. 
For, while State Socialism will no longer hold out the 
more or less speculative chance of a fairly large income 
which is promised by State Capitalism, it will give the 
small producer a secure position and a satisfactory in- 
come, either under the government or in close affiliation 
with it. The small capitalists, then, will contain a grow- 
ing fraction of thorough-going State Socialists. 

The intellectual leaders also of the present movement 
towards State Capitalism tend more and more to pass 
over into State Socialism. This tendency has become 
very marked of late in America. When William Allen 
White, for example, says that ''capital, the product of 
the many, is to be operated fundamentally for the bene- 
fit of the many," 1 he endorses a principle that passes, as 
far as the phrase is concerned, even beyond State Social- 



THE TRANSITION TO STATE SOCIALISM I99 

ism into Socialism pure and simple. But in actual prac- 
tice this phrase means only that capital is to be controlled 
by the majority of ''the many/' which, however, would 
soon lead us through State Capitalism into State Social- 
ism. 

Similarly, Dr. Lyman Abbott advocates what he calls 
"democratic Socialism," though it is really democratic 
collectivism only. He says the new radical movement 
aims to abolish "capitalism," "the wages system," and 
"the distinction between the possessing and the non-pos- 
sessing class." This is exactly what State Socialism will 
do, but far from establishing "industrial democracy" and 
abolishing classes, as Dr. Abbott claims it will, this sys- 
tem will merely set up government by a certain majority 
and put a new social class in power: the aristocracy of 
labor. Like all the social changes through which we are 
passing or are likely to pass it will bring great improve- 
ments for all classes. But it will give the control of gov- 
ernment and industry and of the economic surplus, after 
providing for an efficient lower class, into the hands of 
the new majority. 2 

So, also, the keen analyst of popular movements who 
edits the New York Journal writes that the people will 
some day say to the trusts: 

"Thank you very much. We have learned the Lesson. 
We see that it is possible for One Power to own and 
control All Industry, All Manufactures, All Commerce, 
and we, the People, will be that One Power." Of course 
the question remains, Who will compose the majority of 
the people when that day arrives ? 3 As long as there 
is a very large minority who have never had an equal 
industrial opportunity, there is no genuine industrial 
democracy, but merely State Socialism. 

State Socialism in America is merely a goal, though 
one that is ever drawing nearer. In Australia it is rap- 



200 THE TRANSITION TO STATE SOCIALISM 

idly becoming a fact. The Labour Party, which has gov- 
erned Australia for several years, is undoubtedly evolving 
steadily from a State Capitalist party, at the mercy of 
those of its supporters who are drawn from the small 
land-owners, into a State Socialist party relying for its 
power upon the upper layers of the wage-earners and 
other social groups at that level of income and op- 
portunity. It is true that this Party has just been de- 
feated by a narrow margin. But the two referenda 
taken within the last two years show a very rapid in- 
crease in the popularity of its policies, and almost cer- 
tainly promise their acceptance within a few years. These 
policies centre in the fixing of wages and prices by the 
government. Wages are already regulated in large meas- 
ure by the state governments. The Labour Party pro- 
poses that they shall be still more thoroughly regulated 
by the national government. Prices are to be fixed 
"where effective competition does not ensure a fair and 
reasonable price to the consumer." 4 

It is true that agricultural prices, which have more to 
do with the high cost of living than all others put to- 
gether, are especially exempted from this price regula- 
tion. It is also true that the Labour Party pledges itself 
to continue the £5,000 ($25,000) exemption from the 
progressive land tax. And this shows that the Labour 
Party still considers itself dependent on the small capi- 
talist vote. But already such voters, as indicated by the 
last election, have largely gone over to the other side — 
leaving only the less prosperous in the Labour Party. 

There is little question that Australia is on the verge 
of trying price regulation on a large scale. And, when 
this is done, it will find that the high price of food is by 
far the greatest element in the high cost of living. A 
country that has already applied a graduated tax to agri- 
cultural land will not long delay in lowering the £5,000 



THE TRANSITION TO STATE SOCIALISM 201' 

exemption and in appropriating a larger and larger part 
of the future rise in the unearned increment of agricul- 
tural land, the chief cause of high food prices, to public 
purposes — especially to the purpose of reducing the high 
cost of agricultural products. Already the movement for 
land nationalization is strong in the Labour Party, and 
the nationalization of land rent is merely the scientific 
way of accomplishing this object. 

In Great Britain, also, the movement for land national- 
ization (or the nationalization of ground rent) is grow- 
ing very rapidly. Not only has the Government decided 
to take 25 per cent of the future rise of city land rents 
but Lloyd George has announced that it has still more 
radical steps in view. The most radical part of this new 
program is that which circumscribes the rights of the 
landlord against the tenant, not only giving him an almost 
permanent tenure, but giving him also every advantage 
in the determination of the amount of rent, which is 
practically to be fixed by the government. The aim is to 
aid small agricultural capitalists — who, in Great Britain, 
already have their capital concentrated in farm animals, 
machinery, etc., rather than in land. But the method 
is very radically collective. The conditions under the 
new law are thus ably summarized by an American 
editor 5 : 

"The landlord cannot raise the rent on his practically 
immovable tenant except with the approval of the land 
commissioners, if the tenant chooses to appeal to them. 
Present rents of small farms, the chancellor opines, are 
pretty often too high, and the commissioners will be 
empowered to order a reduction of such rents whenever 
that seems equitable. Then, if the tenant is obliged 
to pay higher wages for farm labor, he can claim a pro- 
portionate reduction of rent, throwing part of the wage 
increase on the landlord. 



202 THE TRANSITION TO STATE SOCIALISM 

"Again, if a period of agricultural depression devel- 
ops, through successive crop failures or prolonged low 
prices, the tenant may appeal to the land commissioners 
and secure a proportionate reduction of rent until times 
improve. 

"In every settled country ownership of land is a mo- 
nopoly, because no one can get any land except by buy- 
ing out an owner. In Great Britain this monopoly is in 
comparatively few hands. The government does not 
propose to trust-bust the monopoly by parcelling out the 
lands. It proposes simply to brush the private monopo- 
lists aside by taking over practically the whole manage- 
ment of the business. The landlord will still receive his 
rent — such rent as the government permits him to exact 
— but beyond that he will have very little to say in the 
matter." 



This Government measure aimed to enable agricultural 
laborers to own small holdings or to rent them economic- 
ally, and so working at first in the opposite direction from 
collectivism, is endorsed by the Labour Party. But the 
Labour Party is, after all, not a party of small capitalists 
and the growing strength of the land nationalization 
movement, which has now been flourishing in Great Brit- 
ain for more than a quarter century, especially among 
the wage-earners, is sure to push it forward soon. The 
skilled trade unionists that govern the Labour Party are 
bound, in the long run, to take up policies that will im- 
prove the economic position and increase the political 
power of the classes they represent, and those on a simi- 
lar economic level, at the financial and political cost of 
the upper classes — of the landlords first of all, but later 
of all employers and capitalists. 

At present Premier Asquith's land program and eco- 
nomic policy are based on the very opposite principle. 
For he vigorously attacked the doctrine just mentioned 



THE TRANSITION TO STATE SOCIALISM 2C»3 

in Parliament (June n, 1913), and very accurately 
defined it as the doctrine "that a democratic government 
should be concerned with the constant amelioration, at 
great expense to the community, of the social conditions 
of the less favored classes of the country at the cost of 
other classes. " 

It is true that this "doctrine," which is indispensable to 
State Socialism — until it gets into power — is not yet 
fully grasped even by British State Socialists, and is 
rarely, if ever, applied by them in matters of immediate 
and practical reform. But it is being increasingly ap- 
plied in several countries, in certain modifications, by 
existing governments — including that of Great Britain 
under Premier Asquith. 

To begin with, the social conditions of the less favored 
classes are being ameliorated at the expense, not of all 
other classes, but of the owners of "unearned incomes," 
of monopolists, and of landowners. At least this is the 
explanation of the policy of the present British govern- 
ment given by Asquith's ministerial associates, Winston 
Churchill and Lloyd George. 

Second, the wealthy are being made to pay an increas- 
ing proportion of the taxes — not only because they are 
to be the chief beneficiaries of the new social reforms 
(a topic I have dealt with in previous chapters), but be- 
cause they are held to be the double beneficiaries of gov- 
ernment expenditure generally, which protects their 
property as well as their lives, i. e., just as it protects the 
lives of all of the population. This is the ground given 
by the present French government for its promise to 
place the chief burden of the heavily increased military 
expenditures on graduated direct taxes. 

Third, the German government, in levying still heavier 
and more steeply graduated taxes than the French, gives 
a still more cogent defense. The wealthier the individual 



204 THE TRANSITION TO STATE SOCIALISM 

the more he is able to pay without 'crippling the pro- 
ductive capacity of the nation. Thus the German gov- 
ernment applies to the rich the railroad policy of charg- 
ing "what the traffic will bear." And there can be little 
question that both France and Germany will allege similar 
reasons when, in the near future, they proceed to expend 
a part of the proceeds of this same form of taxation, not 
for militarism, but for social reform — the amelioration 
of the conditions of the less favored classes. 

Lloyd George, Roosevelt, Professor Wagner, and 
many others have advocated the use of taxation for the 
more equitable distribution of wealth generally, that is, 
have adopted in to to the principle Asquith denounces. 
But the other taxation policies just mentioned — 
namely, that the wealth of a certain part of the wealthy 
classes belongs to the community, that the wealthy should 
be made to pay a special price for the protection of their 
property, that they must bear the chief burdens because 
they are best able to bear them — will, in the long run, 
amount to much the same thing, that is, to the use of 
taxation to bring about a somewhat more equitable dis- 
tribution of wealth. If sufficiently extended, any one 
of these doctrines will suffice. For example, nothing 
can stop the constant increase of the taxation of that 
group of the wealthy whose income Churchill regards 
as unearned. And, if all three principles are taken 
together, they are quite as radical as the general doctrine 
denounced by Asquith, and will soon lead up to it. 

The only additional point we need to remember is that 
"the less favored classes" are not a unit, and will not 
profit equally in the expenditure of the new taxes. While, 
by this policy, the conditions of all will be improved con- 
stantly, and at public cost, it is only when a group be- 
comes part of the political majority that its relative posi- 
tion will be improved at the cost of the upper classes. 



THE TRANSITION TO STATE SOCIALISM 205 

Every great political overturn marks the coming of 
some new social group into a position of political power. 
When the new group has once obtained power it re- 
ceives governmental benefits at the expense of the upper 
classes — for it does not pay to increase the burdens of 
the lower classes and so "to kill the goose that lays the 
golden tgg. ,} On the contrary, as I have shown, more 
is to be obtained from these classes by a constant in- 
crease of the outlay scientifically expended on them. 

The true nature of collectivism under capitalistic direc- 
tion and of current social reforms, which are aimed to 
increase of profits, is being grasped at last even by the 
most dogmatic and least democratic of British collectiv- 
ists. Even Bernard Shaw has now seen a new light. 6 

"Collectivism is not Socialism. We have pooled the 
London water companies, the London bridges, and the 
telephones, just as we shall presently pool the railways, 
but the income they yield is distributed as unequally and 
absurdly as ever. I am a railway shareholder, and shall 
be very glad to have the railways nationalized, as it 
would mean, in effect, government security for the in- 
come I get from the money you, dear reader, pay for 
your tickets. Complete collectivism is quite compatible 
with the maintenance of privileged classes and rich idle 
classes at the expense of a proletariat in which the hew- 
ers of wood and drawers of water would receive barely 
enough to keep them alive when their work was needed 
and be flung into the gutter to starve or into the com- 
mon workhouse when it was not needed." 

Shaw shows in these last lines that he does not yet ap- 
preciate that the capitalists are rapidly realizing that, in 
order to get the maximum profits, even out of "hewers 
of wood and drawers of water," these workers must not 
only be kept alive but must be made healthy and effi- 



206 THE TRANSITION TO STATE SOCIALISM 

cient. But his main conclusion, that collectivism, in the 
hands of privileged classes, means a more equal distribu- 
tion of income, will hold true for the masses of the wage- 
earners, even after half of the population is admitted, on 
more or less equal terms, into the privileged class. 

Note. — On page 202 I predicted that the British Labour Party 
would soon change its small capitalist position on the land ques- 
tion for a position in accord with the interests of the aristocracy 
of labour. As so frequently happens with progressive movements 
to-day, the event took place even before it was expected. The 
conference of the party on January 29, 1914, passed a resolution 
warning the working people against the Liberal (Lloyd George) 
reforms on the ground that they would merely perpetuate private 
ownership through the creation of small landowners and other 
means, and urged that only those measures should be favored 
which would lead towards the ownership of the land and its values 
by the community. The resolution proposed that a tax should be 
levied upon all town and agricultural lands, by means of which the 
State could buy its lost titles within a reasonable space of time and 
on conditions just towards all existing interests. 



CHAPTER XII 

THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

The social class I have variously referred to as the 
skilled workers, the upper layers of labor, or the aristoc- 
racy of labor, is based on a privileged occupation, a higher 
income, and opportunities above those of the average 
wage-earner or his children. I have pointed out that 
these privileged workers are becoming a part of the ma- 
jority that controls governments. They are also depend- 
ent upon governmental favor for the continuation of 
their privileges. If they are members of skilled trades, 
they rely upon the government not to educate so many 
to enter these trades as to cause a fall of wages and a 
decrease of privileges. If they are members of excep- 
tionally important industries, or services, like the rail- 
ways, telegraphs, and post-office, they will also receive 
favored treatment from the government, even when they 
have no very special skill — in order to prevent the enor- 
mous losses strikes would entail. But the workers of this 
group are as dependent on governments as governments 
are on them. It is true that despotic governments, 
like that of Prussia, do not yet deal liberally with the 
railroad workers, which makes many of them Socialists. 
But, when Prussia is democratized and under small capi- 
talist control, the same attitude may be expected on the 
part of its government as already prevails in this coun- 
try, where it seems an accepted part of public policy that 
railway workers should receive exceptionally good treat- 
ment — including those who, like firemen, conductors, and 

207 



208 THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

trainmen, do not as a rule require the highest degree of 
skill. And we may expect to see this attitude extended 
gradually to other and less skilled railway employees. 
The situation in France and Great Britain is transitional. 
But recent strikes are already bringing these countries 
to adopt a policy similar to ours. And wherever this 
policy is adopted the railway workers are separated in 
their economic interests from the laboring masses. It 
may pay the laboring masses to continue in political unity 
with these and other skilled workers until the demands 
of the aristocracy of labor are fully granted and State 
Socialism is firmly established. But the economic con- 
flict that is already raging between the skilled and un- 
skilled, in America, Australia, France, Italy, and Great 
Britain, is bound under State Socialism to bring about 
a political separation also. 

The separation of the labor movement into two 
parts, profoundly antagonistic on many fundamental is- 
sues, is most advanced in France. It is obscured in that 
country by an apparent conflict between the political 
and the economic organizations. But all social conflicts 
are at bottom class struggles — based on an underlying 
conflict of interests which is at once economic and po- 
litical. This conflict within the labor movement of 
France, as in other countries, is based on the opposition 
of the interests of the skilled (and other similarly situ- 
ated social groups) to the interests of the unskilled and 
semi-skilled. This internal class-struggle has taken on 
the false form of economic vs. political organization, of 
labor union Socialism vs. political Socialism, because cer- 
tain elements of the working classes are only just finding 
to which group they belong, i. e., as between the skilled 
and the unskilled. The skilled workers of to-day were 
preceded, first, by artizans, who could hope to become 
small employers, and later by craftsmen, whose skill re- 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 209 

quired so many years to learn that it was easy to make 
it the monopoly of the workers involved in the trade. 
The craftsmen are still the dominating factor in many 
of the older trade unions in every country. In France 
both artizans and craftsmen are exceptionally numerous, 
and, as they come to be replaced by the new type of 
skilled or unskilled workers, they have become bitterly 
dissatisfied and extremely radical. As they represent a 
decaying class which has no future, they have no real 
affiliation with any element of present society. Hence 
they become at once ultra-revolutionary and ultra-Uto- 
pian, in a word Anarchistic. And in France this class 
has not only thrown in its lot with the unskilled, but has 
often led them, and has always had a deep influence. 

Nor are the artizans and craftsmen the only factors 
that have obscured the underlying issue between the aris- 
tocracy of labor and the laboring masses in France — 
and made it look like a conflict between Socialist unions 
and a Socialist political party. The French govern- 
ment has been so subservient to the large capitalists and 
so bureaucratic as to drive a large number of govern- 
ment employees, railroad workers, post-office and tele- 
graph employees, and even school teachers, into tem- 
porary alliance with the laboring masses. But this 
movement has already been checked by large concessions 
from the government, and, when the present wave of 
militarism has subsided and small capitalist democracy 
is once more in the ascendant, there is little question that 
such government employees will be treated with an ever 
greater liberality. 

Discounting the effect of these temporary phenomena, 
we still see that they can by no means explain away the 
profound significance of such divisions in the French 
labor movement as these: the approval of the govern- 
ment's working-men's pension law by all the Socialist 



2IO THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

members of Parliament but one, its almost unanimous 
rejection by the Confederation of Labor; the denunci- 
ation of "sabotage" by all the Socialist members of Par- 
liament but one, its approval by an overwhelming ma- 
jority of the Federation of Labor, etc., etc. This class- 
struggle has existed now for nearly ten years, and it may 
safely be said to be growing greater rather than less. 
(See Appendix E.) 

The situation has also been confused in Great Britain 
by the temporary sympathy between the skilled railway 
workers and seamen, involved in the strikes of 191 1, and 
the new revolutionary movement of the unskilled, as seen 
in the transport workers' union and the revival of older 
unions of unskilled, like the gas-workers. But the better 
treatment skilled seamen and railway men are gradually 
getting will soon remove them as far from the masses 
of laborers as the older craftsmen were — and the Dublin 
strike has already shown the widening gulf. 

One of the clearest indications that the fundamental 
class-struggle between the two classes of wage-earners 
has spread throughout the whole of the international 
labor movement is the denunciation of all independent 
movements of the unskilled and semi-skilled by the In- 
ternational Secretariat of Labor Unions, which is domi- 
nated by the German Socialists and German Socialist 
Unions — but has embraced nearly all larger and older 
unions in all countries. The French and Italian Syndi- 
calists are attacked frequently and referred to as Anar- 
chists, while members of American "industrial" unions, 
in which the unskilled dominate, are called "syndicalists" 
■ — even when they are actually members of the Socialist 
Party. 1 At the same time the Australian Labour Party 
is favored — though it is non-Socialist and is bitterly 
criticized by the unskilled workers and the Socialists of 
Australia. As the weekly bulletin of the Secretariat is 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 211 

published in nearly all the Socialist and labor union 
papers of the world, it may be seen that this amounts to 
an aggressive and powerfully organized effort to repress 
the revolt of the laboring masses. In Italy, after a long 
struggle, the laboring masses are gaining control of some 
of the most powerful labor organizations. This meant 
secession from the general movement on the part of the 
railway workers and such other unions as can expect 
governmental or legislative favors, especially in view of 
the recent establishment of universal suffrage. The 
separation became more fixed than ever after the general 
strikes in Milan and other cities in 19 13. The Secre- 
tariat thereupon made a furious attack on the unions of 
the unskilled, and gathered money for their opponents, 
but all in vain, as the Milan general strike swept nearly 
the whole movement along with it. 2 

The Secretariat claims that European unions do not 
recognize any other membership card than those by 
American Federation of Labor Unions — which is cer- 
tainly not true of the European syndicalistic organiza- 
tions. 3 The Socialist Secretariat explains that it favors 
the non-Socialist American Federation of Labor (which 
has been working chiefly with the Democratic Party in 
this country) because it "refuses to recognize the prin- 
ciple of disorganization, of rival unions, of disharmony 
in the ranks of labor" and says that if a worker stays 
outside the A. F. of L. he will be considered "an ally of 
the employing class." The Secretariat attacks Haywood, 
of the Industrial Workers of the World, as a "syn- 
dicalist," and suggests that his lectures and propa- 
ganda are "injurious to the labor movement." In the 
same number of its bulletin it defends the non-Socialist 
Australian Labour Party against the attacks of the Aus- 
tralian Socialist Party, and includes a defense of the for- 
mer's support of militarism and royalty. 



212 THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

In Australia and New Zealand we see some of the 
clearest examples of this conflict. After twenty years 
of "Liberal and Labour" Ministries in the latter country, 
and all manner of collectivist and labor reforms, we find 
the ranks of labor squarely split on the subject of com- 
pulsory arbitration. Edward Tregear, for many years 
head of the Labour department, confessed that one of 
the causes of the bitter war that was waged during 1912 
between the Federation of Labour and the unions affili- 
ated with the United Labour Party, was the "different 
strata of wages and craft-skill, and want of sympathy 
wrought by diversity of occupation." This is a funda- 
mental difference, indeed, in fact the deepest line 
of cleavage that society can produce. The Federation of 
Labour, which included the miners, stood for "One Great 
Union" and "the Industrial Revolution," and gathered 
into its ranks the important organizations of sheep- 
shearers, wharf-laborers, and others. The United Labour 
Party was supported by "the old craft-unions federated 
into trade-groups — such as Building Trades, Transporta- 
tion Trades, etc." 5 

The immediate cause of difference was that the un- 
skilled opposed, while the skilled favored, the compulsory 
arbitration act, and the skilled and unskilled of Australia 
also took sides in the dispute, the Australian Labour 
Party against the unskilled, of course. As the parties 
in control in both New Zealand and Australia at the 
present moment are not "Labour" parties, but conserva- 
tives, the skilled, who dominate the "Labour" parties, are 
now — temporarily — united with the unskilled against the 
government, and especially against the menace of com- 
pulsory arbitration in its present form. But this unity 
can last only as long as the skilled are not in political 
power. For the skilled workers of New Zealand will 
not all give up in a few years a movement (compulsory 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 213 

arbitration) to which they were wedded for two decades. 
And, in Australia, the railway-workers have just led the 
Labour Party into an effort to strengthen compulsory 
arbitration and they have every promise of early success. 
There, as in New Zealand, it is the laboring masses, un- 
skilled and semi-skilled (except the very lowest paid), 
that are opposed to having their wages fixed by govern- 
ment. And the rapidly growing Australian Rural Work- 
ers' Union, which already has gained 50,000 members, 
within a short time after its organization, promises to 
embrace a large part of the laboring masses in that 
country. 

While the laboring masses have nothing to gain by 
opposing the aristocracy of labor on the political field, 
they also have few favors to expect in exchange for their 
political support. In New Zealand, when the small capi- 
talists were afraid that the wages of the largest group 
of the unskilled, the rural workers, might be raised by the 
government, they excepted rural workers from the bene- 
fits of the compulsory arbitration act. But, when they 
realize that the skilled are only fighting for themselves, 
and will not be likely to use the law for the benefit of the 
rural workers or any other unskilled group, this exception 
may be removed. The very hostile attitude of the Labour 
Parties of Australia and New Zealand to strikes of the 
laboring masses, especially when these Parties have con- 
trolled the national or state governments, shows the labor- 
ing masses what they have to expect. They know that 
compulsory arbitration may give the railway workers 
a growing proportion of the national product, but they 
know also that it will never raise the condition of the 
agricultural laborers and other unskilled above the effi- 
ciency level. Politically, the two groups will continue to 
act together, as the unskilled, if alone, are a minority of 
the total population. But the economic conflict between 



214 THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

the two classes will show the small capitalists that there 
is no danger that the skilled will make any political sac- 
rifice for the unskilled and so no danger of a general 
increase of wages. The skilled will not risk losing the 
political support of the small capitalists by raising the 
wages of the unskilled labor beyond the efficiency point. 
In thus deserting the unskilled the aristocracy of labor 
runs no risk of losing their political support ; for, politi- 
cally, there is no other place for the unskilled to turn; 
and after all they have more in common with the skilled 
workers than with any other class. 

The Labour Party of Great Britain — which is far 
more completely in the control of the aristocracy of labor 
than any Labor Union Federation or Socialist Party of 
the world — is very friendly towards the Australian Party 
and in the main resembles it, except as to international 
issues, such as militarism, the race question, and the 
tariff. (See Chapter XIV.) The British Labour Party 
is against compulsory arbitration of labor disputes, but 
has favored governmental intervention in recent instances 
(the Seamen's, Railwaymen's and Miners' strikes), and 
looks forward to governmental intervention in the future, 
notwithstanding the fact that government statistics show 
that the recent increases in wages secured through gov- 
ernmental aid — even when added to all other increases 
from 1896 to 19 1 2 — did not keep up with the rise in the 
cost of living, to say nothing of keeping up with the in- 
crease of the national wealth. The attitude of the Brit- 
ish and Australian Labour parties towards the unskilled, 
moreover, is almost identical. 

The British collectivists and social reformers — whether 
Socialists or not — are also in close sympathy with the 
Australian Party. Their leading organ, The New States- 
men, thus sums up the Australian situation after the loss 
of the government in 19 13 — as it appears to these prac- 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 21 5 

tical "Socialist" politicians, who frankly ignore the claims 
of the laboring masses against the rest of the community 
— on the ground that they are politically impotent : 

"In Australia, on this occasion, it was specially the 
growth of the Rural Workers' Union, which has sud- 
denly sprung into a membership of 50,000 — one-ninth of 
the whole Australian Trade Unionism — and the startling 
demands for higher wages and better conditions which 
it has been putting forward, which have scared men of 
strongly progressive opinions, who feel themselves to be 
no more 'plutocratic capitalists' than the extra 'hands 
whom they hire for harvesting. The extremists, with 
their vigor and their fanaticism, always make the party 
go too fast for its rearguard. It is almost impossible to 
get the members of any party to realize that, if they 
are to survive as a majority, they must vote not for all 
that they individually believe in, but only for as much 
as the party as a whole can stand. It is a problem which 
the practical Democrat can never escape." 6 (My 
italics. ) 



This is not only practical but sound and incontroverti- 
ble. If you are to keep a majority you must do exactly 
what the rear guard, the most conservative, say. You 
must obey those who now hold the balance of political 
power, namely, the small employers of unskilled labor re- 
ferred to in this passage. And as industrial evolution 
gives another class the balance of power, namely, the 
skilled workers, they must in turn be conceded absolute 
control of progressive legislation. In each case the un- 
skilled have to follow — and to some extent vote against 
their own interests. They are doing this because it is the 
lesser of two evils. But they are not doing it gladly, and 
they will not do it any longer after the aristocracy of 
labor will have fulfilled their historic and revolutionary 



2l6 THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

function of overthrowing capitalism and setting up State 
Socialism in its stead. 

The effect of "State Socialism" in improving the rela- 
tive position of the skilled, without advancing the un- 
skilled beyond the point of maximum-profit-making ma- 
chines, is shown conclusively by the wages fixed by Aus- 
tralasian authorities — even under "Labour Party" gov- 
ernments. The first effort of the workers in the govern- 
ment wage-courts was to demand increases on the ground 
that the employer could shift the burden of increased 
wages on the consumer. Thus prices rose generally, with 
the following result. Profits, on the average, were not 
deeply affected. In any industry where the skilled work- 
ers are very numerous, or in any industry the employees 
of which are favored for any other reason, the increase 
of wages can be raised somewhat above the average in- 
crease of prices, leaving many other industries where 
the opposite rule must hold and real wages must actually 
go down. I have already shown how the wages of the 
unskilled in Australia were fixed from 1907 to 1912 
(and at the low figure of 7 shillings), while prices were 
rising by leaps and bounds. Even the New Zealand 
courts, which had fixed this minimum at 8 shillings, ad- 
vanced it to 9, though only at the end of this period — an 
increase probably less than the increased cost of living. 

This minimum wage, fixed at a point below which the 
men would be "underfed or degraded," is "a thing 
sacrosanct beyond the reach of bargaining," to use the 
expressions of Justice Higgins, president of the national 
tribunal. 7 When employers cannot pay this wage, the 
Justice is willing that they should "abandon the enter- 
prise." This much benefit is assured to the lowest levels 
of the unskilled by the self-interest of employers. It is 
against the interest of employers as a class that any em- 
ployees should be underfed, degraded, or allowed to de- 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 21 J 

generate and to lose in industrial efficiency. But it is not 
to employers' interests as a class to advance wages be- 
yond this minimum. 

Therefore the ceaseless effort of employers in Austral- 
asia is to show that any increase above this point will 
make the employer "abandon the enterprise." And this 
plea is allowed by Justice Higgins in so far as the men 
are not actually "underfed and degraded," and is disal- 
lowed only in the contrary case. Now there will always 
be employers ready to enter into that business in which 
they expect low wages will be allowed. They may be 
almost as efficient as the others, but every industry is 
overcrowded, and so many will always be on the verge 
of bankruptcy. They have only to show this condition 
to the Australasian courts to prevent them from raising 
wages above the minimum. 

Thus the minimum wage, under an employers' gov- 
ernment, tends automatically to become the maximum 
wage that the courts will guarantee. Already the major- 
ity of the workers are receiving very little more than the 
minimum — in New Zealand the semi-skilled get an aver- 
age of only 25 per cent more than the lowest paid. This, 
as Hammond remarks, is barely enough to make it pay 
"to learn a trade." That is, this figure is really fixed on 
the same principle as the minimum, since it also barely 
covers the cost of production of this semi-skilled labor. 
But the skilled, at least, can make themselves felt politi- 
cally, as recent elections have shown. Already in New 
Zealand, as Tregear says, the small capitalist government 
has seen that its only hope to extend its lease of political 
power is "to keep the workers divided." And this can 
be done only in one way, a way that is certain — though 
expensive. The demands of the topmost layers of labor, 
whether as to wages or other matters, must be granted. 

In Australasia, then, the skilled workers are rapidly 



2l8 THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 

getting into a position that will enable them to force the 
small capitalists to admit them to a full partnership in 
government. This may be done equally well whether a 
"Labour Party" or a small capitalist party is in power. 
For, even if the aristocracy of labor is out of power, the 
small capitalist government must make continual con- 
cessions to it for fear their administration may be over- 
thrown. 

There is every indication, in advanced countries, that 
the Australian situation will soon become general. It 
does not mean a dictatorship of skilled labor — nor the 
oppression either of small capitalists or of laboring 
masses. Nor does it mean any check in the progress of 
either of these classes. But it does mean the gradual 
reduction of the small capitalists' privileges, and the 
gradual increase of the privileges, relative income, and 
relative opportunity of the upper layers of manual and 
brain workers and their children. It does not promise 
any such relative advance for the unskilled. But it does 
promise an absolute improvement of their income, edu- 
cation and opportunity more rapid than that we see to- 
day — an improvement that will prove of highest value in 
the further struggle for equal economic opportunity. 

The class-struggle between large and small capitalists 
is establishing State Capitalism under our eyes. Already 
the conflict is beginning to pass over into a class-struggle 
between small capitalists and wage-earners, and State 
Socialism, the outcome of this second struggle, already 
seems to be drawing near in Australia. But this new 
alignment, as we can see by the increasingly bitter an- 
tagonisms within the labor movement, can by no means 
prove lasting. The conflict between the small capitalists 
and the aristocracy of labor, as we begin to see in Aus- 
tralia, is developing into a third form of class-struggle, a 
class-struggle within the working class — an effort of the 



THE CLASS-STRUGGLE WITHIN THE WORKING-CLASS 2IO, 

laboring masses to abolish all privileges and all classes, 
and to establish equal economic opportunity — -which is 
Socialism.* 

But before passing to the transition of State Socialism 
into Socialism, we must see more definitely what State 
Socialism is, what it has to offer, and, above all, what 
are its limitations. And this is the subject of the three 
following chapters (XIII, XIV, and XV). 

*For the purposes of discussion I have sharply differentiated 
State Capitalism and State Socialism. This differentiation does 
not, however, imply that State Capitalism and State Socialism 
cannot or do not act together against a common enemy. Already 
the Laborites and the Radicals are closely affiliated in England, and 
J. R. MacDonald, chairman of the Labour Party, openly favors a 
larger organization to include his party. The larger organization 
is to be guided by Labour Party "principles," but this is no 
hindrance, in view of MacDonald's very broad interpretation of 
these principles, both in theory and in practice. Keir Hardie also 
expects a coalition government as he indicated in a speech before 
the City Club of Chicago : 

"My anticipation is that Lloyd-George and the Socialist Radical 
wing of the present Liberal party will join forces with the Labor 
party." T 

In Holland and Denmark, during 1913, the Socialists (Laborites) 
were so close to the Radicals that the latter not only invited but 
begged them to participate in a coalition government. Such gov- 
ernments are then not only a possibility but a probability of the 
immediate future. But they are merely transitional; when State 
Capitalism is firmly established, the Radicals will have no further 
need of their State Socialist allies and the latter will be forced 
back for a period into the opposition where they will again pro- 
claim Socialist as well as State Socialist opinions. They will 
continue in such "Socialist" opposition, until they are able to drive 
the State Capitalists from power. And if new coalition govern- 
ments of State Capitalists and State Socialists are then formed 
against another common enemy (the Socialists), it will be the 
State Socialists who will dominate. So that the coalition in this 
case will be a coalition in name rather than in fact. 



CHAPTER XIII 
STATE SOCIALISM, OR LABORISM 

Nearly all Socialist Parties are now devoting their 
chief attention to the policy and program of "Laborism" 
or State Socialism. And they will not turn their energies 
to Socialism again until State Socialist or "Labor" gov- 
ernments will have been established, and their present 
State Socialist members will have become office-holders 
or beneficiaries of these governments. But among the 
supporters of the Socialist Parties there are large num- 
bers of Socialists. The majority of the members of 
these Parties probably believe that they should give their 
energies mainly to Socialism and not to State Socialism. 
And when State Socialist governments are once firmly 
installed there is no doubt that their wish will be satis- 
fied, since there will then be no further alternative before 
the Socialist Parties other than Socialism. 

But to-day this same force of circumstances, logic of 
events, or political situation, brings it about that all is- 
sues which stand any chance of immediate settlement 
can have only a State Capitalist or a State Socialist solu- 
tion. Indeed no other solution of any question is even 
thinkable until a Socialist majority is either actually pres- 
ent or is seen to be impending. 

Thus there is to-day an almost irresistible outside pres- 
sure on Socialist Party officials, Socialist members of 
Parliament, Socialist editors and writers, tending to 
sweep them into the current of the times — a current 

220 



STATE SOCIALISM, OR LABORISM 221 

which is wholly non-Socialistic and sets towards State 
Socialism or State Capitalism. And, when this pressure 
does prove irresistible, the "lost leaders" carry along with 
them the machinery by which the Party is controlled. 
For, though far more democratic than other organiza- 
tions, the Socialist Parties are by no means perfect democ- 
racies, nor are the members as well-informed and ag- 
gressive in defending their interests as pure democracy 
and Socialism require. In spite of all that can be said 
there are "leaders," and these are selected as being the 
part of the movement most accessible to every manner of 
outside influence — with the sole exception of sheer finan- 
cial bribery (which is out of date as a means of in- 
fluence anyway). The result is that such leaders are 
controlled almost as much by non-Socialist flattery, sug- 
gestion, "public opinion," political pressure, and political 
promises (though not usually by personal pressure or per- 
sonal promises), as they are by the wishes of those they 
claim to serve. The whole Party machinery thus stands 
half-way between the Socialists and the outside non- 
Socialist "public," which favors either State Capitalism 
or State Socialism. And so the Party machinery is used 
almost as much to bring the Party to follow its leaders, 
who follow the non-Socialist public, as it is used to per- 
suade the non-Socialist public to follow the Party. Thus 
it was that the recent revolutionary reversal of the policy 
of the German Party was not even first submitted to a 
Party Congress — and even if it had been so submitted 
this would not have been a democratic method. (See 
Appendix C.) This Party professes to believe in the 
Referendum, but during recent years it has not submitted 
a single public question of first importance to a Party 
vote. And the Party Program, now twenty-three years 
old, has not been placed before the Party for reconsider- 
ation in all this time. The Party clamors for equal elec- 



222 STATE SOCIALISM, OR LABORISM 

tion districts for the Reichstag, but leaves the basis of 
representation on its own national committee and also for 
some of the state congresses on a grossly unequal footing. 
Nor are conditions much better in the Socialist Parties of 
other countries. Everywhere we find highly complicated 
political machines in firm control — somewhat tempered, it 
is true, by democracy — and certainly superior in this re- 
spect to other political organizations. But everywhere 
we find a strongly conservative bureaucracy manipulating 
the far more radical membership to the full extent their 
power allows. 

So the question whether the majority of Socialist 
Party members are as yet anything more than State So- 
cialists, or Laborites, cannot be positively answered. 
They probably are. And they certainly will be when the 
State Socialists have left the opposition entirely, in order 
to support "Labor" governments. 

Laborism means that, with the first State Socialist ad- 
ministration, certain groups of wage-earners, for the first 
time in history, will hold the balance of political power 
and control government. This will mean a great advance 
not only to the groups admitted to power, but also the rest 
of the wage-earners. This progress will come partly, as 
under State Capitalism, through the fact that industry 
can advance only as the industrial workers also advance — 
at least in some degree. The masses of wage-earners 
will also profit, however, by the mere fact that wage- 
earners — even if those of a different economic level — • 
will be in control of government. 

But the unions controlled by these upper ranks of 
wage-earners call themselves "labor" unions, and their 
parties they call "Labor" Parties or even "Socialist" Par- 
ties. They claim that both kinds of organization — labor 
unions and Labor Parties — are operated equally in the 
interest of all labor, and when they secure control of gov- 



STATE SOCIALISM, OR LABORISM 22£ 

eminent, as in Australia, they claim that they govern for 
the laboring masses as well as for themselves. 

This is the momentous doctrine of the "solidarity of 
labor," the rock upon which every labor organization, 
until recent years, was built. It is true that a part of the 
laboring masses were admitted into these organizations — 
as minorities. It is true that their interests were con- 
sulted — when they did not conflict with those of the 
skilled workers in control. For their co-operation was 
important in strikes and indispensable in politics. It is 
also true that, in leading the masses into the battle to 
convert State Capitalism into State Socialism, the aris- 
tocracy of labor have done them the greatest possible 
service. But the motive of this aristocracy — as with all 
social classes — is self-advancement. The moment the 
aristocracy of labor have an opportunity to become part 
of the ruling class they forget all about the solidarity of 
labor. Their present position all over the world shows 
their complete readiness for this new "turn" (it is not 
correct to speak of a desertion or betrayal in referring to 
a class), and their behavior in Australia removes all 
question. 

It cannot be supposed for one moment that the attitude 
of the aristocracy of labor towards the laboring masses 
is any more selfish than that of any other class towards 
those below it. On the contrary it is exceptionally lib- 
eral, as its large donations to strikes of the unskilled will 
show. This liberality may be partly accounted for by 
the desire of the skilled to protect their positions from 
competition from below and to secure co-operation in 
strikes — but it is nevertheless a liberal policy. What 
separates the two classes is not their moral or intellectual 
differences, but their varying position as to politics and 
the strike. The skilled workers have usually more to lose 
and less to gain by strikes. Not only are they usually 



224 STATE SOCIALISM, OR LABORISM 

opposed to striking with the unskilled, but they often aim 
to prevent strikes of the unskilled; and in proportion as 
their own position and advancement are secure they will 
favor the prohibition of such strikes — which force them 
into unemployment. This attitude is neither exception- 
ally selfish, nor unwise, nor surprising in any way, but is 
to be expected. They may donate one per cent of their 
annual income to the strike funds of the unskilled; they 
cannot be expected to donate the eight and one-third per 
cent they lose for every month of idleness. Moreover, 
the unskilled, on their side, are willing to co-operate with 
the skilled and to strike with them almost wholly for 
selfish reasons. For, when the final settlement comes, it 
is almost inevitable that they should claim a greater need 
for an advance of wages than the skilled. 

Marx made the important observation that, in the revo- 
lutions of 1789 and 1848, a middle social group co-oper- 
ated with the masses against the ruling class, until this 
group obtained power, when it immediately deserted its 
former allies. But Marx believed that in the coming 
revolution the solidarity of labor would prevent this 
desertion of the middle group. Great effort has been 
spent in an attempt to show that Marx's view that social 
progress is chiefly through revolutions was erroneous, 
and that no more revolutions are to be expected. Very 
little attention has been given to this far more moment- 
ous dictum that the upper layers of labor will be gov- 
erned by the interests they hold in common with the 
masses of labor rather than by conflicting interests — or 
the price they will be able to obtain by going over to the 
ruling class. (See Appendix A.) 

It has been generally supposed that the laboring masses, 
who at present compose three-fourths or more of the 
working class, will easily be able to control the privileged 
minority, who compose less than one-fourth. But a ma- 



225 

jority can control a minority in an organization only as 
long as the latter have no alternative and must remain a 
part of the whole. Now the aristocracy of labor are 
soon to have an opportunity to become part of another 
unity, the ruling class. Even after they have been taken 
into the privileged group, they may still claim to be de- 
voted to the solidarity of labor, so as to maintain a cer- 
tain degree of independence for themselves within the 
ruling class, but they will soon become the controlling 
and responsible part of the government, and so will be 
forced to abandon this middle ground. 

The day when the aristocracy of labor will secure the 
balance of political power is already at hand, not only 
in Australia but also in America and other economically 
advanced countries. If we add agricultural laborers 
and servants to industrial wage-earners, the wage-earning 
class has furnished 50 per cent of all occupied persons 
in this country since 1890. But we must remember that 
a large part of the agricultural laborers are directing 
their whole lives to become farm tenants or farm owners, 
and often succeed in this aim. Let us leave these aside, 
then, as an intermediate group. This will not affect the 
comparative change taking place, as the agricultural labor- 
ers show a tendency to constitute a fixed part of the 
population (13 per cent). Even with this deduction we 
find that the rest of the wage-earners had become 50 
per cent of the population in 1900, and the growth of 
cities indicates that the proportion must be far greater 
now. 

If our suffrage were really equal, then the skilled 
workers would have held the balance of power in 1900. 
In spite of suffrage restrictions they have probably held 
it since 19 10 — though they have not been so organized 
as to make very effective use of this power. And cer- 
tainly the census of 1920 will place the balance of power 



226 STATE SOCIALISM, OR LABORISM 

wholly in their hands. This process will be immensely 
hastened as women vote, since the percentage of wage- 
earners among women at work is far greater than among 
the men. 

Those classes which expect to become a part of the 
ruling majority are the firmest believers in the necessity 
and justice of governing the minority against their con- 
sent, though, of course, they claim that this is for the 
good of the minority. The most responsible and con- 
scientious spokesmen for the aristocracy of manual and 
mental labor, Mr. and Mrs. Sidney Webb, concede "that 
a certain measure of popular consent" is needed. But 
their whole theory of government, and that of the upper 
layers of wage and salary earners generally, is one of 
the enforced submission of the masses of the workers : 

"So far as we can see, every step in economic progress, 
every increase in real opportunities for the expansion and 
development of the individual — we may fairly say every 
advance of civilization itself — involves an ever-wider 
subordination of the momentary impulse to the deliber- 
ate purpose, and of the individual decision to the gen- 
eral will. Moreover, as knowledge increases and the 
specialized sciences and arts develop, there comes inevi- 
tably a specialized subordination, not of a whole class of 
laymen to a separate expert class, but with regard to 
each man, lay or expert, brain-worker or manual laborer, 
in respect of the functions other than his own, a subordi- 
nation of the person who does not know to the person 
who knows, of the person who cannot to the person who 
can. A sick person subordinates his will, even with re- 
gard to his own fears and appetites, to the will of the 
physician or surgeon. . . ." 1 

When the Webbs compare voluntary subordination to 
a physician, and the inevitable subordination to experts 
to the compulsory subordination of whole social classes 
to government, we see how weak they feel their position 



STATE SOCIALISM, OR LABORISM 227 

to be. Nor is there any real ground to fear that at 
any stage of progress government will on the whole be 
more compulsory than it is to-day. The tendency is 
altogether in the opposite direction. But such views as 
those of the Webbs show the utter superiority felt by the 
aristocracy of labor towards the laboring masses, a feel- 
ing that will be accentuated when they control govern- 
ment and will inevitably tend still further to increase the 
growing hostility that the laboring masses already feel 
towards them. 

While there are no national federations of labor that 
exclude the skilled, there are several unions that now 
insist that the very basis of any unionism that is to ad- 
vance the unskilled is that the latter must dominate 
within the organization. The "industrial" form of or- 
ganization is usually preserved in such organizations, that 
is, the skilled are invited to come in, but only as a min- 
ority — if not a minority in the industry, then a minority 
in the new federation of industrial unions. Naturally, 
under these conditions, the skilled rarely come in — espe- 
cially as they have federations of their own which are 
far stronger up to the present time — and as they know 
they can continue to have their own way for a good 
many years — on account of their superior strategical 
position in politics. 

The leading organization of the unskilled in America 
(The Industrial Workers of the World) contends that 
the organization in which the skilled dominate (The 
American Federation of Labor), "through its origin and 
development, its structure and methods, was essentially 
an organization of the skilled tradesmen, wholly unfitted 
to deal progressively with the revolutionary movement 
of the unskilled mass now dominant in all trustified indus- 
tries." 

"To promise the unskilled protection through a union 



228 STATE SOCIALISM, OR LABORISM 

primarily controlled and dominated by and for the skilled 
is to betray the unskilled and render their movement im- 
potent in its struggles with the master class. 

"Frankly, the I. W. W. did not expect any such revo- 
lutionary transformation of the A. F. of L. immediately 
or ultimately. The 'skilled' would resist it; the 'un- 
skilled' would not wait for it." 2 

"At the outset the I. W. W. attempted to put new 
wine in old bottles. That is, it tried to create an indus- 
trial union movement out of the progressive and dissatis- 
fied elements of craft unionism. It failed. These ele- 
ments were unstable and nearly pulled the structure down 
with them in their reactionary attempts at control. Only 
with the unskilled and migratory workers as the dominant 
element did the I. W. W. succeed." 3 

It is a sign of the deep and widespread influence of 
the dogma of the "solidarity of labor" which consciously 
or sub-consciously underlies the whole of the present 
labor movement, that even these revolutionary innovators 
who are organizing the unskilled do not altogether aban- 
don it. The editorial first quoted continues, in seeming 
contradiction, to say : "Born not as a 'dual' organization 
to dispute the field already occupied by the craft unions, 
the I. W. W. proceeded on the theory that modern capi- 
talist industry had made the unity of the working class 
impossible under the direction of the privileged workers. 
The unity must proceed from below — out of the depths 
of the agony of the unskilled." But this statement does 
not mean that the writer places "the unity of the work- 
ing class" above the interests of the masses of the work- 
ers. His view does not imply any willingness to com- 
promise with the skilled, but is based on a very general 
belief that the skilled are becoming insignificant in num- 
bers, and therefore can easily be controlled, or, in the 
near future, can even be ignored without violating the 



STATE SOCIALISM, OR LABORlSM 220 

solidarity of labor. " 'Skill' is an unstable and vanishing 
quantity in American workshops; the 'skilled worker' is 
an unstable basis upon which to organize the American 
working class," continues the same editorial. But the 
skilled, in the old sense of the word, are merely being 
replaced by exceptionally speedy and reliable workers, 
who are even more highly paid. And, moreover, the ad- 
vancing political control of industry would elevate the 
better paid laborers into the ruling class even if they 
were only semi-skilled, as they are in some favored gov- 
ernment employments, for the reason that they are com- 
ing to hold the balance of political power. 

Whatever degree of solidarity of labor is brought about 
will undoubtedly be brought about by the unskilled — 
since they are far less specialized and far less separated 
than the various groups of the better paid. Thus the 
unions of the various industries may be welded together, 
and so at least three-fourths of the workers unified. 
But the aristocracy of labor will remain separately or- 
ganized and there will thus be no unity of "the work- 
ing class." 

The doctrine that the solidarity of labor is inevitable, 
that economic evolution will force the skilled workers to 
merge themselves completely in the rest of the working 
class, is one of the most persistent in the Socialist move- 
ment. "The worst enemies of the working class," says 
Kautsky, "are the pretended friends who encourage craft 
unions, and thus attempt to cut off the skilled trades 
from the rest of their class. They are trying to turn 
the most efficient division of the proletarian army against 
the great mass, against those whose position as unskilled 
workers makes them least capable of defense." On the 
contrary the skilled have hitherto dominated the labor 
movement not from without, as Kautsky fears they may, 
but from within, i. e., through the "solidarity of labor," 



236 STATE SOCIALISM, OR LABORISM 

and the partial separation of the two elements recently 
has obtained for the unskilled in a few years more than 
they had previously obtained in a generation. 

Kautsky, who, like other Socialists, expects capitalist 
aristocracies to stand for their own interests exclusively, 
expects the aristocracy of labor to stand for the interests 
of a lower class : "Sooner or later the aristocratic ten- 
dency of even the most highly skilled class of laborers 
will be broken. As mechanical production advances, one 
craft after another is tumbled into the abyss of common 
labor. This fact is constantly teaching even the most 
effectively organized divisions that in the long run their 
position is dependent upon the strength of the working 
class as a whole." On the contrary, the relations between 
the aristocracy of labor and the ruling classes are becom- 
ing closer every year in all the more advanced nations, 
not even excepting Germany. (See Appendix C.) 

The representatives of the skilled workers are fully 
conscious of their position. The Municipal Platform of 
the Socialist Party of New York City, written by the 
right wing of the Party, makes the following significant 
defense of that form of "solidarity" embodied in the 
"industrial" unions of the American Federation of Labor: 
"How far does a worker at present own his job? Just 
to the extent the employer needs him, and no more. The 
worker owns the skill and the endurance; he owns the 
observing, receptive brain, the trained muscles and the 
dexterous hands; he owns the education that has gone 
into learning his trade — even if that trade is only wield- 
ing a pick and pushing a shovel — and he owns the prac- 
tice acquired through many years of following his trade. 
He owns himself and nothing more." Here the whole 
labor question is frankly made one of the ownership of 
skill, which is considered, as Debs has pointed out fre- 
quently, happens with skilled workers, precisely like the 



STATE SOCIALISM, OR LABORISM 23 1 

ownership of capital. The attempt to classify pick and 
shovel "skill" as equally valuable property is an obvious 
failure. 

All organized and aggressive movements of the masses 
of labor, separately from the skilled, are now loosely re- 
ferred to as "syndicalistic." So, when Lloyd George said 
in Parliament, without contradiction from the Laborites 
present, that "the best policeman for the syndicalist was 
the Socialist," he meant that the British aristocracy of 
skilled labor (the trade unions and the Labor Party) were 
the most effective enemies of the movement of the labor- 
ing masses. The bitter hostility this aristocracy has 
shown to the new labor movement leaves no doubt that 
Lloyd George was right. And similarly, when the So- 
cialist Party in this country attacked "sabotage," the Cen- 
tury Magazine said this was "a great gain for true con- 
servatism," while The World's Work, and also Ray Stan- 
nard Baker, suggested that the Party seemed destined to 
become "one of the conservative bulwarks of the coun- 
try." The recall of the I. W. W. leader, Haywood, from 
the executive committee of the Socialist Party was also 
approved almost unanimously by the conservative and 
anti-Socialist press. It is evident that the American So- 
cialists are also being relied upon as "the best policemen" 
to keep down unwelcome movements of the masses of 
labor. 

The attacks of the "aristocracy of labor" against the 
"new unionism" of the unskilled are now too numerous 
even to summarize. The most important is the threat 
that the new State Socialist society will not even tolerate 
the existence of such unions. If this threat is carried 
out, when the aristocracy of labor comes into power, the 
laboring masses will have less liberty than to-day. Yet 
it has been frequently made, and even by a man who was 
until this year one of the seven members of the National 



2$2 STATE SOCIALISM, OR LABORISM 

Executive Committee of the American Socialist Party, 
John Spargo: 4 

"We can hardly escape the conclusion that the attitude 
which the labor unions of to-day very properly take in 
industrial conflicts would not be tolerated if adopted 
against the State. In self-protection the State would be 
obliged to treat as treasonable acts which are perfectly 
proper and justifiable when directed against individual or 
corporate employers.' , 

We can scarcely wonder that the unions of the laboring 
masses are even more bitterly opposed to this kind of 
"Socialism" than they are to the present social system, 
Spargo's threat will in all probability never be carried 
out, even under State Socialism, as the tendency is all the 
other way — towards greater liberty (see Chapter VI), 
but it is obviously sincere and it shows the laboring 
masses an opinion that prevails in the most influential 
circles of the American Party. And it is certain, more- 
over, that a State Socialist government will oppose strikes 
even more strongly than a State Capitalist government 
will — for more people will then feel the financial losses 
they bring to government and industry. It may not op- 
pose them by violence or coercion. A rigid system of 
fines and other financial penalties will be more effective — 
though even these will be far from sufficient to prevent 
strikes altogether (as I shall show below). 

It is evidently in accord with all we know of history 
and human nature that popular movements, after suc- 
ceeding, are deserted by their upper layers, which become 
a part of the new ruling class. But it is to the interests 
of the representatives of skilled labor to obscure this 
fact, and this is also to the interest of those who, like 
most Socialists, make of skilled labor the most important 
element or at least an absolutely indispensable element, 
of the "unity of the working class" — thus giving the aris- 



STATE SOCIALISM, OR LABORISM 233 

tocracy of labor a veto over the rest. There are two 
ways by which the real position of the skilled may be 
obscured. One is by asserting the essential democracy 
of the aristocracy of labor. The other is by asserting the 
degeneracy or the reactionary character of large parts 
of the laboring masses — thus weakening their position in 
three ways, by greatly decreasing the numbers admitted 
to be respectable, and by suggesting that they are all only 
a step from this low condition, and by making it pos- 
sible to allot to this submerged class any sections of the 
laboring masses who do not behave themselves to suit 
the labor aristocracy. 

So Kautsky portrays a large part of the laboring masses 
as "exploiting every revolution that has broken out, only 
to betray it at the earliest opportunity." 5 Whatever may 
have been true of the past, it is, on the contrary, the aris- 
tocracy of labor that is almost certain to do the betraying 
in the future, though Kautsky shows animosity and 
belies his economic standpoint in introducing a term 
of reproach for an entirely natural and inevitable ac- 
tion. 

The lower ranks of the workers are referred to in 
German Socialist literature as the "Lumpen-proletariat." 
Lumpen means rags and also rabble. Lump means raga- 
muffin or even blackguard. So all the connotations of 
this conveniently elastic word are anything but flattering. 
On the whole it may be rendered as "rabble-proletariat," 
as in some English Socialist translations. 

In order to show just what is meant by this ostracized 
"Lumpen-proletariat" and just what is the Socialist atti- 
tude towards it, let us notice, first, what Kautsky says 
about the social group that Socialists consider as most 
nearly related to it, namely, servants. While he admits 
the growing importance of this group (it is becoming a 
larger and larger part of the total number of wage-earn- 



234 STATE SOCIALISM, OR LABORISM 

ers), he expresses also the extreme hostility of the Ger- 
man Socialists : 

"The growing intensity of exploitation, the constantly 
swelling surplus enjoyed by the capitalist, together with 
his resulting extravagance, all favor a steady increase 
in the number of those employed as servants. That is 
to say, they favor the growth of a class which, despite 
its lack of prosperity, is not at all a promising recruiting 
ground for the Socialist movement. 

"The modern servant, accordingly, comes into relations 
of peculiar intimacy with his master, and thus he has 
naturally developed into a foe of the oppressed and 
exploited working class; not infrequently he is more 
ruthless than his master in his treatment of them. 

"Small wonder that among the people generally noth- 
ing is more hated than this class of menials. Their sub- 
servience toward those above and their brutality toward 
those below have become proverbial." 6 

The lumpen-proletariat is treated in an almost identical 
spirit. It is defined by Kautsky as consisting of the 
chronically unemployed — but is by no means limited by 
him to the unemployable. The lumpen-proletariat are, 
on the contrary, those "who could work but found noth- 
ing to do" (op. cit, p. 1 68). This leaves the unemploy- 
able or deficient as a separate problem. And we may 
admit that these, the congenitally weak, are a hopeless 
class from the standpoint of a mass movement. As long 
as society is divided between the rulers and the ruled, 
the ruling class will always be able to buy such persons 
for their purposes. They are neither very numerous 
nor very valuable to the rulers, but it is this group alone 
that can, even in small measure, deserve the violent attack 
many Socialists have extended to the whole of that 
great army of labor "who could work but have found 
nothing to do" — an army that, together with servants, 



STATE SOCIALISM, OR LABORISM ^35 

composes a very large part of the laboring masses. This 
is what the official Socialist spokesman says of the whole 
"Lumpen-proletariat" : 

"For them there was nothing but to beg, steal, or pros- 
titute themselves. They were compelled either to perish 
or to throw overboard all sense of shame, honor and 
self-respect. They prolong their existence only by giv- 
ing precedence to their immediate wants over their regard 
for their reputations. That such a condition cannot but 
exercise the most demoralizing and corrupting influence 
is self-evident. 

"Furthermore, the effect of this influence is intensified 
by the fact that the unemployed poor are utterly superflu- 
ous to the existing order ; their extinction would relieve 
it of an undesirable burden. A class that has become 
superfluous, that has no necessary function to fulfill, 
must degenerate. 

"And beggars cannot even raise themselves in their 
own estimation by indulging in the self-deception that 
they are necessary to the social system; they have no 
recollection of a time when their class performed any 
useful services; they have no way of forcing society to 
support them as parasites. They are tolerated. Humil- 
ity is, consequently, the first duty of the beggar and the 
highest virtue of the poor. Like the menials, this class 
of the proletariat is servile toward the powerful; it fur- 
nishes no opposition to the existing social order. On 
the contrary it ekes out its existence from the crumbs that 
fall from the tables of the rich. Why should it wish to 
abolish its benefactors? Furthermore, beggars are not 
themselves exploited; the higher the degree of the rich, 
all the more have the beggars to expect. Like the menial 
class, they are partakers in the fruits of exploitation; they 
have no motive for wishing to put an end to the system. 

"In character and view of life the slum proletariat ap- 
proaches the lowest ranks of the farmer and small bour- 
geois class. Like these it has despaired of its own 



2$6 STATE SOCIALISM, OR LABORISM 

power and seeks to save itself through aid received from 
above." 7 

Thus we see the Socialists — through Kautsky — declare 
themselves to be a middle class party (though not in the 
sense of small capitalistic party, of course). They re- 
nounce the four lowest economic groups — the chronically 
unemployed, the servants, the poorest farmers, and the 
poorest shopkeepers and small producers. 

The above Socialist view is largely founded, no doubt, 
on the difficulty of democratizing the lower remnants of 
feudalism in Europe. Doubtless the classes thus ostra- 
cized from the mass-movement have been reactionary in 
the past. But no allowance is made for the change now 
taking place and the still greater improvements impend- 
ing under State Capitalism. Kautsky says : "The slum 
proletariat has always been the same, whether in mod- 
ern London or ancient Rome. The modern laboring 
proletariat is an absolutely unique phenomenon." 8 The 
first statement was true of the whole world until recently ; 
it is still largely true of London, and partly true of other 
large cities. But a rapid change is taking place every- 
where. Ours is the first generation in which the masses 
are literate, the first generation with newspapers which 
the masses can and do read. The general advance of 
civilization, and especially the advance of the laboring 
masses (slower, but undeniable) has affected the whole 
population, including the lowest economic class, and ex- 
cepting only a very small percentage, the congenitally 
sub-normal. This improvement, already becoming more 
and more rapid, will make the lowest classes under State 
Socialism comparable, not with the Roman mob, but with 
the upper classes of Rome (if we except only the very 
highest classes in the best periods). 

Nor will the statement bear the least analysis that 



STATE SOCIALISM, OR LABORISM 2$J 

the modern proletariat — apart from these lowest ele- 
ments — is "absolutely unique." The degree of organiza- 
tion, information, and intelligence of the artizans of 
many ancient and mediaeval cities was already consider- 
able, often fully equal to that of the first generation or 
two of those engaged in modern industry (before 1850 
or 1875, i- e -> before railroads and newspapers became 
general). Kautsky's theory, the official theory of the 
German Party, is vitiated by the strange assumption that 
occupations, rather than the level of income and oppor- 
tunity, divide society into classes. All those social groups 
which have the incomes and therefore opportunities 
similar to those of unskilled or semi-skilled labor (what- 
ever their occupations) will, on the contrary, belong 
to one economic group, those that have the incomes 
and opportunities of the skilled to another. The common 
occupation of "wage-earner" will bring about no solidar- 
ity of labor and create no "absolutely unique" class, ex- 
cept as long as skilled and unskilled are both excluded 
by their economic level from the ruling class. As soon 
as the skilled have an opportunity to join the rulers and 
a motive to leave the ruled they will do so, as will all the 
other social groups of the same economic level. 

The theory that society is divided by occupations comes 
from the middle-age cities and their survivals in Euro- 
pean law, especially that of Germany, where "legal 
status" is still familiar to all, if of comparatively little 
practical effect. For some reason this idea of the division 
of society by occupations has survived. Why? And 
what are the present functions of that idea? First of all, 
that it teaches the masses of labor that they cannot ad- 
vance in any way, politically or by labor union action, 
now or later, except through the whole working class, 
through the solidarity of labor and co-operation with 
the "aristocracy of labor," which means, practically, by 



238 STATE SOCIALISM, OR LABORISM 

the latter's consent. And, secondly, it allows the skilled 
to lay the greatest importance on purely occupational 
or industrial conflicts, not only upon strikes won at the 
expense of all that part of the working class not immedi- 
ately involved, but also upon such conflicts as that be- 
tween town and country, between agriculture and man- 
ufacturing industry. This last conflict the German 
Socialists encourage in Germany, Austria, and elsewhere, 
both in theory and practice, and sometimes even prefer 
to the so-called class struggle with employers, thus put- 
ting labor against the whole agricultural population, even 
the hardest working farmers, who never employed a 
laborer in their lives. (See Appendices B and C, on the 
way in which the German Party subordinates everything 
to the cost-of-living issue.) 

As long as the day of State Socialism has not yet ar- 
rived, however, and State Capitalism even is not yet fully 
established, the fact that the Socialist Parties — especially 
in Europe — represent small capitalists and the aristocracy 
of labor does not prevent them from representing the 
laboring masses also, as far as they can be represented 
politically. And if the Socialist Parties separate from 
the small capitalist class and the aristocracy of labor 
successively, when these become the ruling classes, they 
may continue, under State Socialism, to do all that can 
be done politically for the laboring masses. 

There remains the question of economic action under 
State Socialism. The revisionists who now control the 
German Party (see Appendix C), according to the Party 
historian, expect "from the successes of the unions, a 
gradual expropriation of the capitalist class." 8 In this 
expectation the ultra-moderates are at one with the Syn- 
dicalist writers (see Appendix E). And there can be 
little question that this gradual expropriation both by 
labor union or economic means, though not yet begun, 



STATE SOCIALISM, OR LABORISM ^39 

unless in Australasia, will begin before many years — but 
only for the upper levels of labor. 

If the International Socialist Congresses, which at 
present represent the aristocracy of labor, were certain 
that the laboring masses would never get control of the 
national federations of unions, they would undoubtedly 
give the latter a position in the Socialist movement in 
every way parallel with Socialist political parties, as they 
have already done in Belgium and Austria. But in France 
and Italy, the laboring masses are not far from con- 
trolling these federations. It was for this reason that 
the International Socialist Congress at Stuttgart, by a 
vote of over 200 to 7, rejected the French resolution, 
which merely asked that when the unions stood for So- 
cialism they should be recognized as being as competent 
to work for it along labor union lines, without political 
control (even by a Labor Union Party), as was the party 
to work for it along political lines without being con- 
trolled by labor unions (even though Socialistic). But 
the International recognizes that the day may come when 
the union federations may pass out of their present con- 
trol and fall into the hands of the laboring masses. And 
we may be certain that this will indeed happen in propor- 
tion as the skilled workers begin to get the benefits of 
their political strength (due to their holding the bal- 
ance of power), while the unskilled, on the contrary, find 
themselves excluded from these benefits — and receiving, 
as under State Capitalism, only that kind of advance that 
is derived, not from power, but from the fact that, like 
work-animals, they can render a larger and better product 
with better and more scientific treatment. 

I have shown that the explanation of the German 
Party's position is not theoretical but practical. It rep- 
resents chiefly the upper levels of labor, and claims 
equally to represent the laboring masses in order to ob- 



240 STATE SOCIALISM, OR LABORISM 

tain the latter's political support. But Kautsky and others 
have taken it upon themselves to concoct a theoretical 
foundation after the fact. Their general standpoint, the 
economic interpretation of politics and the study of po- 
litical questions as based on conflicting class-interests, is 
now accepted not only by all Socialists but also by a very 
large part of the world's progressives. But this stand- 
point had to serve also to explain the fundamental con- 
tradiction in party policy just referred to. How was this 
accomplished ? Very simply, indeed. The economic and 
class interpretation was applied exclusively to opponents, 
but never to the constituent elements of the Socialist 
Party. Kautsky et al. have steadily refused to turn the 
searchlight of the economic and class-conflict interpreta- 
tion on to the working-class itself. "Working-class soli- 
darity" on the contrary has become an ideal not to be 
analyzed, a mystical dogma to be preached, but not to be 
explained, a Utopia based upon the "social instincts" of 
the working class (another name for the much-despised 
altruism). In a word, "working-class solidarity" is a 
perfect example of that very "ideological" habit of 
thought against which the economic and class-conflict in- 
terpretation was directed. This great modern stand- 
point, which Marx did so much to promulgate, has 
ceased, in the hands of these Socialists, to be an instru- 
ment of science, and has become a mere weapon with 
which to attack political opponents, or a shield by which 
to defend oneself from scientific criticism. 

Strange to say Kautsky speaks of that class of salaried 
brain-workers that corresponds to the skilled manual 
workers in an entirely different way. These "intellect- 
uals" as they are called in some countries, or the educated 
proletariat, as Kautsky calls them, are, it seems, not to be 
relied upon. 9 Yet it is difficult to see any deep distinction 
either between their form of skill and that of the skilled 



STATE SOCIALISM, OR LABORISM 24 1 

manual workers, or between the politics of the two 
groups. 

The "intellectuals" have evolved a Socialism of their 
own, most clearly to be seen in the British Fabian So- 
ciety, a Socialism which is almost identical with that of 
the aristocracy of manual labor. While this program is 
largely that of the progressive capitalists, it is also State 
Socialist at some points — like the program of the Ger- 
man Socialist Party (see the following Chapter), 

The underlying principle of the "intellectuals" is 
not State Capitalism but State Socialism. So certain are 
they of becoming a part of the ruling majority that 
they even endow the present State with the beneficent 
qualities they expect their State to have. Sidney Webb, 
for example, says that the function of government is 
nothing less than "to secure progress," and so he hails 
every extension of the functions of present Governments 
(at least in Great Britain) as that much advance in So- 
cialism — no matter whom such Governments represent. 9 

Next year will be a quarter of a century since the pub- 
lication of the Fabian essay, and thirty years since the 
foundation of the Fabian Society. During this period, 
especially in the past ten years, the opponents of this form 
of State Socialism have frequently felt that Fabianism 
was dying out. The first secessions from the Society (in- 
cluding that of the present writer) took place in 1907, 
when the Fabian Executive cordially approved the first 
railway settlement, which was later condemned even by 
the most conservative Laborites. Again, a few years ago, 
at the time when H. G. Wells made his attack on the 
Fabian bureaucratic spirit, it seemed that the Society was 
passing into a decline. 

But since the Lloyd George Budget of 19 10, there 
has been a revival of that State Capitalism and State So- 
cialism for which the Fabians stand. And the foundation 



242 STATE SOCIALISM, OR LABORISM 

last April of The New Statesman, by Webb, Shaw and 
others, undoubtedly marks a new birth of the Fabian 
movement. The first twenty-two numbers contain an 
extremely important series of articles by Mr. and Mrs. 
Sidney Webb, entitled "What Is Socialism?" — which 
is also to appear in book form. A better title might have 
been "The New Fabianism." It is certain that no such 
able or sincere presentation of the State Socialism of the 
"intellectuals" has yet been published. 

I shall not attempt to sum up in this brief space the 
policy of The New Statesman, but shall merely note 
that it entirely coincides with that of the prospectus of 
the paper and of the Webb articles. One of the first 
statements of the prospectus was that The New States- 
man "intends to avoid the error of supposing that those 
for whom it speaks have either a culture or a morality 
differing from that of the other members of the commu- 
nity." Thus at the very outset the new Fabianism left 
half of Socialism to one side and confined its Socialism 
to the political and economic movement. Though it con- 
cerns itself very largely with cultural matters, it does 
so from an avowedly non-Socialist- standpoint. 

Next The New Statesman renounces the class struggle. 
Progress, it claims, will not be brought about by the 
"warring of social classes." Such wars may well be 
"incidental" to social advance, but progress will be mainly 
due to "the union of all the forces of sincerity and pub- 
lic spirit." 

These Socialist reformers stand for order and organi- 
zation in general, rather than for any particular kind of 
order. They announce themselves as collectivists, but 
by collectivism they mean only a system that will provide 
a complete policy of social organization and govern- 
ment. "Social legislation has suffered in point of quality 
and effectiveness from a lack of logical and coherent 



STATE SOCIALISM, OR LABORISM 243 

criticism. It has neither been inspired by any definite 
conception of future social organization nor has it been 
measured by any standard of social principle." The idea 
here is that there is only one form of efficiency and one 
form of order, which supposition, if granted, certainly 
precludes all class struggles — and even all serious dif- 
ferences of opinion. 

And, finally, the prospectus assailed, not class rule, but 
"individualism," while the Webbs, in their articles, at- 
tack not class ownership, but private ownership. 

The Socialist State pictured by the Webbs presupposes 
(1) the domination of the "intellectual" class and of the 
"aristocracy of labor," and (2) the permanent subjection 
of the unskilled workers. They appeal especially to the 
new middle class or "minor professionals," which consti- 
tutes, in Great Britain, 20% of all persons having an in- 
come less than $800 a year. The Webbs, it is well known, 
represent also the conservative Trade Unionists, who, no 
doubt, compose another 20% of all persons of this income 
level (which the Webbs say forms 8~9ths of the total 
population). It is these two classes, minor professionals 
and aristocracy of labor, that are coming to hold the bal- 
ance of economic and political power, and are expected 
by the Webbs to inaugurate in Great Britain, not merely 
State Capitalism (in which the small capitalists domi- 
nate), but also State Socialism (in which the small capi- 
talists are subordinated to these two classes). 

The "intellectual" Socialists, we find, judging by the 
Webbs, do not want to make any fundamental democratic 
change either in the class distribution of education or in 
the character of the present culture which is their capi- 
tal. Culturally the Webbs' attack is against the effect 
of "plutocracy" on science, art, and religion and not 
against the effect of class-rule — which will continue when 
"plutocracy" is dead and when the more successful 



244 STATE SOCIALISM, OR LABORISM 

among the "intellectuals" together with the aristocracy 
of labor will have become the ruling class. 

We find that the Webbs make a curious distinction be- 
tween plutocrats and those "artists, scientists, authors, 
poets, musical composers," etc., who have "earned" in- 
comes up to $25,000 a year! The fact that educational 
privilege and advantages due to the possession of a small 
private capital have multiplied such incomes many times 
over what they otherwise would have been, does not 
dampen the Webbs' friendly feeling for these wealthy 
associates. They confess that they have come from 
homes "other than the manual worker's," but seem to at- 
tach no significance to this fact. 

What the intellectuals look forward to is really a benefi- 
cent rule of — the intellectuals. "Socialism is the applica- 
tion of science to social organization," we are told by the 
Webbs. If we ask what science is meant we are an- 
swered, "science untrammelled by plutocracy," that is the 
science of the present intellectual class. The social hier- 
archy will be sufficiently democratic to satisfy them when 
the plutocrats are removed and the intellectuals and allied 
classes are left on top. There is to be no revolution and 
no class struggle to disturb the $25,000 incomes. All that 
will then be needed will be to develop "the motive of 
social obligation and the service of Humanity." 

The intellectuals now on top are superior and should 
stay there, but they must not be influenced by "the motive 
of pecuniary gain" any more. They are evidently supe- 
rior, because there is already "something like a common 
level of wages and salaries, in each country, at each par- 
ticular period for workers of equivalent capacity" — and 
"all the abler, all the more cunning, all the more gifted, 
all the more powerful of those who are propertyless" 
(my italics) are already taken into the service of the 
capitalists. The Webbs seem to have forgotten this when 



STATE SOCIALISM, OR LABORISM 245 

they wrote a few weeks later of the immense gain to 
society when all talent, including that coming from homes 
"other than the manual worker's," would be developed. 
The late Professor Lester F. Ward calculated that this 
gain would be 100%, and that we are giving intellectual 
opportunity to only one per cent. 

In the intellectuals' Utopia, now approaching, these 
high salaries will continue, except that the rich will not 
be there to pay high prices, fees, etc. But, to compensate 
for this loss, the intellectuals will find in public bodies 
or the general educated public, purchasers much more to 
their taste. The Webbs express the hope that the intel- 
lectual, writer, artist, etc., will only ask what he needs to 
develop maximum efficiency. But they admit that the 
intellectual of their "Socialist" society may ask more and 
get it, and they say not a word about the possibility of 
lowering such excessive pay by increasing the competition 
for these higher paid places — say 100 times, as Ward sug- 
gests is possible. Such a leveling of educational oppor- 
tunity would mean a revolution indeed among the intel- 
lectuals and their culture, and this is no doubt why the 
more prosperous intellectuals oppose revolution. 

It is this class ideal of the intellectuals that the Webbs 
apply to education, as to all other questions, and not 
the Socialist ideal, of which they are perfectly conscious 
however, since they themselves describe it accurately as 
"equality for all children whatever their parentage — for 
each child, irrespective of wealth or position, the fullest 
practicable opportunity for the development of its charac- 
ter and its talents." It is evidently not on the basis of 
this last named ideal that they make their extremely low 
calculation of the sums needed for public education in 
Great Britain, but on their feeling that the amount and 
character of the intellectual ability now supplied are, after 
all, fairly satisfactory. They demand, at the outside, only 



246 STATE SOCIALISM, OR LABORISM 

two or three times the sum now expended, which would 
by no means be sufficient to make a "secondary education 
genuinely available to the poor," as the Fabians them- 
selves demand. This last mentioned standard would 
doubtless require, in America, four or five times the pres- 
ent expenditure, as I have shown in Chapter V. People 
as familiar with statistics as the Webbs must know just 
what their low estimate for Great Britain would mean. It 
would mean to bring the efficiency of the people's children 
to the maximum as wage earners and to furnish such ad- 
ditional professional talents as are now inadequately sup- 
plied from the middle and upper classes, but it would 
not create "too much" competition for the intellectuals 
and their children, nor "overcrowd" the professions to 
a degree that would reduce a very large proportion of 
the latter to the ranks, where merit would place them. 

The position of the Webbs is completely at variance 
with the original Socialistic "Basis" of the Fabian So- 
ciety, which is still signed by all of its members. For the 
"Basis" declares against "class ownership," as well as 
"individual ownership," of land and industrial capital, 
and attacks the "economic dependence" of the workers 
and the lack of "equal economic opportunity" in present 
society. The Fabians have often been accused of com- 
promising Socialism. The question now is whether they 
have not altogether abandoned it. For the German So- 
cialists still claim to represent the laboring masses, while 
the Webbs frankly abandon them for the aristocracy of 
mental and manual labor. (For the attitude of the Fab- 
ians and the other British State Socialists towards the 
unskilled of other countries see Chapter XV. Appendix 
F contains a summary of the position of the American 
Socialist Party towards unskilled Asiatics.) 



CHAPTER XIV 
THE STATE SOCIALIST PROGRAM 

The great evil of present society, and of the "progres- 
sive'' society or State Capitalism into which we are now 
entering, is that its very progress is in one sense retro- 
gressive. All classes are getting some share of this prog- 
ress, but the upper or ruling classes, already privileged, 
are getting a larger and larger share. One after another 
new sections of the middle classes are coming into 
power. The proportion of the population that is included 
in the ruling part of society is growing, and a more 
equitable distribution of wealth has begun to take place 
— within these ruling classes. The rest of the population 
is receiving a constantly smaller share of the total prod- 
uct — though the increase of that product is so great that 
a part of it reaches them also. 

The proportion of the nation's wealth and opportuni- 
ties that goes to the upper classes is, then, constantly in- 
creased in spite of all the reforms of State Capitalism — 
however radical and however beneficial to all classes such 
reforms may be. And the same must hold true of State 
Socialism with its yet more radical and beneficent pro- 
gram. Under State Socialism we shall still be increasing 
instead of diminishing the gulf between the classes, we 
shall still be moving away from social and industrial 
democracy and equal economic opportunity — except in so 
far as the new society will provide a more fruitful soil 
for inaugurating the opposite tendency, a tendency for 

247 



248 THE STATE SOCIALIST PROGRAM 

the lower classes to improve their position more rapidly 
than the then upper classes (now the middle groups). 

Now this criticism of State Socialism, even if ad- 
mitted, might seem to be purely invidious, a denial of 
the importance of any improvement for the laboring 
masses unless it brings them more than it brings the other 
classes. For, while most of the benefit of State So- 
cialism will go to the upper classes of that social sys- 
tem, it might seem that the very great progress that 
would admittedly take place, though largely limited to 
these classes, would mean a tremendous advance in civili- 
zation, and as rapid an advance as is possible until so- 
ciety is ready for the next and more democratic stage of 
social evolution. But the truth is that such a society, 
which will deprive a large part of its children of equal 
opportunities, will be far from doing its utmost for civil- 
ization generally — to say nothing of the classes more or 
less neglected. Its progress in industry and science, cul- 
ture and education, will only be a fraction of what it 
should and could be. Half the talents of the community, 
born in the lower classes, will be wasted. And the ruling- 
classes will be able to defend their privileges as now, only 
by basing their whole civilization very largely on sup- 
pressed truth, half-truth, and falsehood. 

Like State Capitalism, State Socialism must fail both 
to make the division of the national income more equi- 
table and to make opportunity more equal — as between 
the ruling classes and the ruled. Let us examine the pro- 
grams of some of the leading Socialist Parties for evi- 
dence of this fact, for apart from their purely abstract 
preambles which are largely Socialistic, the concrete 
demands of these organizations will be seen to be al- 
most exclusively those either of State Socialism or even 
of State Capitalism — though usually, of course, in an 
advanced form. 



THE STATE SOCIALIST PROGRAM 249 

The Independent Labour Party of Great Britain has 
one highly important demand which is not to be found, 
as nearly all its other demands are, on the programs 
of the progressive capitalists, namely, "the abolition of 
indirect taxation and the gradual transference of all pub- 
lic burdens onto unearned incomes, with a view to their 
ultimate extinction." As this demand stands it would 
ultimately lead to the extinction of higher incomes or 
privileges resting on the ownership of capital. It would 
leave intact all those higher incomes or privileges that rest 
on exceptional educational opportunities, and allow these 
privileges to be passed on — in the shape of superior 
schooling — to later generations. That is, it would ulti- 
mately extinguish State Capitalism and establish State 
Socialism. But so would the general ideal of collectivism, 
now accepted as the ultimate aim by many supporters of 
State Capitalism. What the latter really want is a semi- 
collectivist state, though many of them confess that the 
collectivist tendency will probably not stop at semi-collec- 
tivism. They protect themselves perfectly, however, by 
the position that this tendency is very gradual and slow, 
and will not carry them beyond the point they want to go 
in our time. And they use every effort to check any ultra- 
collectivist movement. Similarly the State Capitalists 
also favor a more and more steeply graduated income 
tax. As this tax is, as yet, far from the point they desire 
to reach, they hint, with Lloyd George and Winston 
Churchill, that all unearned incomes ought to be extin- 
guished. Only they do not define the word unearned and 
certainly they do not want the process extended so far 
that their own incomes will be taxed. It will only be 
when the Independent Labour Party proposes to pass this 
point, when it indicates that the "ultimate" extinction 
means an early extinction, and defines what it means by 
"unearned" that it will be taking up a State Socialist 



2$0 THE STATE SOCIALIST PROGRAM 

position even — to say nothing of Socialism. And it will 
only be when it undertakes to make educational oppor- 
tunity equal that the present artificially high salaries and 
professional incomes will be reduced — for this automatic 
method of increasing the competition for the better eco- 
nomic positions is the only way by which this result can 
be naturally and effectively accomplished. 

The Independent Labour Party does not favor com- 
pulsory arbitration of labor disputes, like the Fabian So- 
ciety. (See the previous chapter.) But it does favor a 
minimum wage law, which requires some form of gov- 
ernmental pressure, if it is to be put into practice. This 
law is now being extended from the ready-made tailoring 
trade, and lace-making to shirt-waist making, confection- 
ery, food-preserving, hollow-ware-making, and the linen 
and embroidery trades, and it is only by a technical error 
that laundries were not included in the list. The recent 
miners' strike also was settled through governmental in- 
terference and pressure, as was the last railway strike. 

When such methods of fixing wages are established, the 
skilled workers, who, on account of their middle position, 
are capable of being taken over into the governmental 
party, will inevitably receive all the favors that are to be 
granted (aside from establishing an efficiency minimum). 
These workers are also less numerous and so less costly 
for the government to mollify. The fixing of wages, 
then, either by governmental force or by mere govern- 
mental pressure will mark the definite outbreak of the 
class-struggle between the aristocracy of labor and the 
masses of the workers — a struggle that seems already at 
hand in Great Britain. In politics the laboring masses 
may continue to vote for the parties that represent this 
aristocracy, as they have no alternative, and no prospect 
of forming a party of their own, while they have an al- 
most certain prospect of capturing the Socialist and La- 



THE STATE SOCIALIST PROGRAM 2$1 

bor Parties once State Socialism will have won control of 
government. But the struggle between the two groups 
of unions on the economic field will reach its climax 
at an earlier stage, as soon as State Capitalism begins to 
fix wages on a very large scale. 

Let us now give somewhat more careful attention to 
the German and American Parties — as Socialism is more 
highly developed in Germany than anywhere else, and 
capitalism, the foundation of Socialism, is most highly 
developed in the United States. The Socialist Parties of 
the world are largely modelled on that of Germany, and 
the German Party is built, in its practical activities, upon 
the Erfurt Program of 1891. Since this time it has 
apparently learned nothing and forgotten nothing, for it 
has neither added anything to this program nor taken 
anything away from it. 

The Socialism that promises to give to the mass of the 
wage-earners the same opportunities as the ruling classes 
receives very little encouragement in the German pro- 
gram — only a few abstract phrases in the preamble. The 
measures advocated in the body of the program are ex- 
clusively those of State Capitalism and State Socialism, 
and, while bringing important benefits to the masses of 
wage-earners, are, without exception, the identical re- 
forms by which the small capitalists and the aristocracy 
of labor are increasing their privileges and power. 

This result, it may be said, was almost intentional In 
the previous program, that of Gotha (1875), compara- 
tively little importance had been attached to measures to 
be obtained before the Socialists captured the govern- 
ment. At Erfurt, on the other hand, there was a sort of 
tacit compromise between the revolutionists and the re- 
formers. Even the most moderate and least Socialistic 
reforms were to be placed in the body of the program, 
provided the preamble was given over exclusively to 



2$2 THE STATE SOCIALIST PROGRAM 

revolutionary principles. Indeed, the more clearly non- 
Socialist were the reforms demanded the better this was 
held to be from the revolutionary standpoint. For then 
(it was erroneously supposed) these measures could cer- 
tainly never be called Socialistic, but were clearly nothing 
more than capitalistic reforms that Socialists were ready 
to support. (See Appendix B.) 

Thus began that fatal separation between theory and 
tactics, which is the colossal defect of the German Party 
— when viewed from the standpoint of the laboring 
masses of other countries. Given full possession of the 
practical part of the program, the Labor ites have rele- 
gated the preamble into the more and more distant fu- 
ture, until Von Volmar has actually declared that, how- 
ever erroneous it may be, it is not worth while to change 
it. Freed from the discipline and control of actual life, 
the theoretically Socialistic principles of the Party, sum- 
marized in the preamble, have become antiquated, until 
Von Volmar is right. They can have no influence that 
even the most rabid anti-Socialist need fear. 

But this preamble was thus sterilized by its own fal- 
lacies. For, in trying to lay an ultra-partizan basis for 
Socialism, it claimed everything for the movement of the 
wage-earning class, including all the social functions of 
the small capitalists and the "aristocracy of labor" — with 
what results I shall show. Let me mention briefly a few 
leading points both of the preamble and of the program. 
This is easily done, since the whole preamble and the 
whole body of the program are each less than two printed 
pages. 

The basic proposition of the Erfurt preamble is that 
"private property in the means of production" is the 
source of the ills of present society and that to remedy 
these ills this system must be replaced by "social owner- 
ship and the transformation of commercial production 



THE STATE SOCIALIST PROGRAM 253 

into Socialist production, managed for and through so- 
ciety." If Socialist production is merely production 
"through and for society" a democratic collectivism under 
a privileged majority would suit this definition perfectly. 
For private capitalism or "commercial production" would 
have been "transformed" (and replaced by a new form 
of class-rule), and the governing majority could cer- 
tainly claim to speak for "society" — as then constituted. 
Instead of foreseeing the present transformation of 
private capitalism into State Capitalism, this preamble 
says that private capitalism is growing stronger and that 
monopolists are conquering the small capitalists — thus 
estimating the superior numbers and superior political 
power of the small capitalists as being of no effect : 

"Production on a small scale is based on the owner- 
ship of the means of production by the laborer. The 
economic development of bourgeois society leads neces- 
sarily to the overthrow of this form of production. It 
separates the worker from his tools and changes him into 
a propertyless proletarian. The means of production be- 
come more and more the monopoly of a comparatively 
small number of capitalists and landholders." 

On the contrary, large scale landowning is gradually 
being abolished through the superior political power of 
the small capitalists, while monopolies are being national- 
ized, municipalized, or more and more strictly controlled 
by the State — in the interest, primarily, of the controlling 
small capitalists, but also of the aristocracy of labor, now 
coming into power, while even the masses of the workers, 
incidentally, obtain considerable, though lesser, benefits 
from the process. 

"This social transformation means the emancipation 
not only of the proletariat, but of the whole human race 
which suffers under the conditions of to-day," the pre- 



254 THE STATE SOCIALIST PROGRAM 

amble continues. What an excellent opening to all oppo- 
sition elements that want to come into the Socialist Party 
to make use of it for their class purposes — especially 
small capitalist collectivists and Laborites ! 

The preamble proceeds to describe this transforma- 
tion as follows: "But it (the social transformation) can 
only be the work of the working class, because all the 
other classes, in spite of their mutually conflicting inter- 
ests, take their stand on the basis of private ownership 
of the means of production." How untrue is the last part 
of this statement in an age when the overwhelming ma- 
jority of small capitalists are "partial collectivists" ! The 
program here gives us to understand, moreover, that no 
part of the social transformation to democratic collectiv- 
ism can be brought about by any but the working-class — 
and that both parts of the working class are equally inter- 
ested in that society. That a Socialist society will only be 
established by the action of the mass of wage-earners 
may be understood. But why should the small capitalists 
hesitate to nationalize the private property of the large 
capitalists — especially when they are in control of the 
government ? And how can the laboring masses have the 
same interest in establishing a society based on a privi- 
leged majority as has "the aristocracy of labor," which 
expects to be included in that majority? 

This historic preamble declares further that society is 
divided into but "two hostile camps" and that these camps 
are "the proletariat" and the "bourgeoisie." Undoubt- 
edly society is gradually dividing into two camps. But 
one of these camps is that of the laboring masses, who 
will be kept in a permanent minority by the constant ele- 
vation of their "upper crust" into the ruling class. And 
the other is composed of the aristocracy of labor and, for 
a considerable period, of the small capitalists (together 
with allied social groups, in each instance). Meanwhile 



THE STATE SOCIALIST PROGRAM 255 

we have not two classes, but four: the three just men- 
tioned and that of the large capitalists. 

Our preamble then proceeds to speak of the "grow- 
ing increase of the insecurity of livelihood, misery, op- 
pression, enslavement, degradation, and exploitation," 
whereas, of all these evils, it is only exploitation that 
will increase under progressive capitalism. ( See Chapter 
III.) And the preamble further claims that the agri- 
culturists and middle classes — far from being the ruling 
class of to-morrow — will suffer all these calamities as 
well as labor! 

And, finally, this foundation document of German So- 
cialism contends that the interests of all the working- 
class are the same in all lands, and that all the workers 
of each country are constantly more and more dependent 
on those of other countries. This is true only of the 
laboring masses, and then only in proportion as State 
Socialism nears its end and Socialism approaches. To- 
day even these laboring masses are often parasites on the 
workers of other countries, and this system will be con- 
tinued for a time at least, even under that democratic 
collectivism (State Socialism) for which this preamble 
prepares the way. (See Chapter XV and Appendix F.) 

These digressions from the essential and central prin- 
ciple of Socialism 'are all the more contradictory and 
surprising (except under the explanation I have given — 
that they are part of an effort to capture small capitalists' 
and privileged wage-earners' votes), in view of the clear 
enunciation of the real aim of Socialism in the conclusion 
of the preamble : "not new class-privilege and exceptional 
rights [or opportunities] but the abolition of class domi- 
nation and of classes themselves." 

But the Erfurt preamble merely prepares the way for 
State Socialism, without intending to do so, while the 
body of the program, which alone counts to-day, devotes 



256 THE STATE SOCIALIST PROGRAM 

itself exclusively either to State Socialist or to State Cap- 
italist reform. Its framers consciously and intentionally 
omitted the chief transitional measures proposed by Marx 
and Engels in the Communist Manifesto, the state ap- 
propriation of land rent for public purposes, and the 
nationalization of industries. Yet it adopted and ex- 
tended the program of labor reform proposed in the 
manifesto and added to this a large program of demo- 
cratic changes in political machinery. Why this curious 
omission of two parts of the collectivist program and 
adoption of two other parts? 

The Party discussions at the time and afterwards show 
the cause very clearly. (See Appendix B.) To increase 
the government's income by land rent and the profits of 
industry was to increase the power of an organization 
(the government) which was firmly in the enemy's hands. 
But it was for this very reason that Marx had refused to 
consider either these measures or labor legislation, or any 
other measures, as means of transition to Socialism, ex- 
cept in proportion as the Socialists at the same time con- 
trolled the State. Both the operation of industry and 
the administration of labor laws by a non-Socialist gov- 
ernment — though beneficial to the mass of wage-earners 
and so to Socialism — will undoubtedly be carried out 
chiefly to the benefit of the class that controls the govern- 
ment. The effect of the nationalization of railroads by 
Bismarck's government was clear to all — it was chiefly 
to the benefit of government and ruling class. But labor 
reforms seemed to be in a different category, because 
intended, first of all — in point of time — to make certain 
improvements in the condition of the laborer. On the 
surface they are chiefly for the laborer's benefit. And 
it takes a little thought and observation to see how, when 
these reforms are rigidly restricted within certain limits, 
they mean, indirectly and ultimately, far more in profits 



THE STATE SOCIALIST PROGRAM 257 

to the employer than they do in benefits to the employee. 
The Socialists took advantage of this popular prejudice 
of the laborers in favor of labor legislation to make it 
the basis of their practical program — in spite of the fact 
that it rests upon the same principles as the omitted policy 
of nationally operated industries or the nationalization of 
land rent. 

As to the measures of the Erfurt program that de- 
mand political democracy, the case is slightly different. 
As Marx showed in his letter at the time of the first Ger- 
man Congress (at Gotha in 1875), wherever the small 
capitalists have a safe majority, there we have political 
democracy, and where they are in a minority they will 
not allow political democracy. Only one amendment to 
this proposition is needed, though it is an extremely radi- 
cal one. Wherever the aristocracy of labor has become 
strong enough to force its way into the ruling class, it 
will join the small capitalists and enable them at once 
to form a privileged majority — which means that democ- 
racy will then be granted — an outcome that is near at 
hand in all advanced countries. 

The labor reforms proposed by the Erfurt program 
are all commonplaces among the progressive programs of 
to-day. They are: 

( 1 ) An eight-hour day by law, 

(2) Prohibition of child-labor under 14, 

(3) Prohibition of night-work (with exceptions), 

(4) Sunday rest and Saturday half-holiday, 

(5) Prohibition of the truck system, 

(6) Extended factory and sanitary legislation, 

(7) The extension of this protection to agricultural 

laborers and servants, 

(8) The right of combination, 

(9) Workingmen's insurance (the workers to have 

an influential share in its administration), 



258 THE STATE SOCIALIST PROGRAM 

The more modern nations are already well advanced 
on this road. Few persons will doubt that the progressive 
small capitalists will finish the task even before the aris- 
tocracy of labor shares their power or takes control of 
government. 

The political reforms advocated are also progressive 
commonplaces : 

( 1 ) Equal suffrage and for both sexes, 

(2) Proportional representation, 

(3) Biennial legislatures, 

(4) Payment of legislators, 

(5) No curtailment of political rights, 

(6) Direct legislation, 

(7) Local self-government, 

(8) Officials to be elected by the people and to be 

responsible to them, 

(9) Taxes to be voted annually, 

(10) A national militia with universal service, 

(11) Decision of war and peace by the legislature, 

(12) International arbitration, 

(13) Freedom of speech, meeting and assembly, 

(14) Equal rights for women, 

(15) Compulsory free education and maintenance in 

common schools, 

(16) Free education and maintenance in higher 

schools for those pupils who, in virtue of their 
capacities, are considered fit for further train- 
ing. 

(17) Free administration of the law, 

(18) Judges to be elected by the people, 

(19) Indemnification of innocent persons, prosecuted, 

arrested, or condemned; abolition of the death- 
penalty, 

(20) Free medical attendance, including midwifery and 

free medicine, 



THE STATE SOCIALIST PROGRAM 259 

(21 ) Graduated income and inheritance taxes ; abolition 

of indirect taxes, 

(22) Legitimization of all children, revision of di- 

vorce laws, inquiry into paternity, and protec- 
tive measures for children materially or morally 
abandoned. 

This completes the list, with the exception of a few 
measures, such as those demanding separation of Church 
and State, secularization of education, etc., which interest 
Germany or European countries only. 

Every one of these measures is upon the capitalistic 
progressive program, and all will be accomplished by 
the time State Capitalism will have run its course — with 
one possible exception to be noted later. The year when 
the first State Socialist government is installed will mark 
the completion of any of these reforms that may have 
been delayed to that moment, and will bring about 
the removal of last barriers to that so-called demo- 
cratic or popular rule which is in reality majority rule 
only, the establishment in power of a privileged ma- 
jority. 

The accomplishment of the overwhelming majority 
of these reforms might leave the small capitalists more 
firmly entrenched than ever. The enactment of the 
whole program is exactly what the aristocracy of labor 
desires — along with the nationalization of industry and 
of ground rent, an omission supplied by the Communist 
Manifesto. For there is nothing in the program to men- 
ace the indefinite rule of a privileged majority consisting 
largely of favored governmental employees, and not a 
word about the establishment of that equal opportunity 
which alone can institute social or industrial democracy 
for the mass of wage-earners. 

There is one proposal of the program, however, which 
IS an important part of the change needed to establish 



26o THE STATE SOCIALIST PROGRAM 

State Socialism. This is the provision for free main- 
tenance of children in the higher schools. But this is 
only the first part of the first of the two steps required 
to make a Socialist policy effective. 

In his Gotha letter to the founders of the present Ger- 
man Party, in 1873, Marx pointed out that to make 
higher education "free" without enabling the poorer stu- 
dents to maintain themselves meant "practically to pay 
the educational expenses of the upper clrsses alone out 
of the common taxes." 

When this letter was finally given to the Socialistic 
public — in 1891 — the Erfurt program seemed partly to 
carry out Marx's idea by demanding "the free mainte- 
nance in the higher educational institutions of those pupils 
who, because of their capacity, shall be considered suited 
to further education." The Gotha program had merely 
demanded in a vague way that education should be 
"equal." 

The Erfurt Program remains, essentially unmodified, 
as the educational position of the German Party — though 
considerably amplified at Mannheim in 1906. (See Chap- 
ter XVI.) It leaves only one point unclear—but that is 
absolutely essential, if this reform is to carry us even in 
the direction of equal educational and occupational op- 
portunity. No word is said about how many children are 
to be publicly provided for. The elevation of a few 
would in no way improve the proportion of the total op- 
portunities of the community enjoyed by the children of 
the masses. The promotion of a few would un- 
doubtedly displace some of the children of the upper and 
middle classes, as both the professional schools and the 
professions are already overcrowded. But this auto- 
matic expulsion of a handful of the "hopeless block- 
heads" is recommended by conservative government peda- 
gogical authorities, such as Cauer, on the ground that it 



THE STATE SOCIALIST PROGRAM 26 1 

would stimulate competition among the more capable 
upper class students that would remain. 1 

Thus the promotion of a few "who through their tal- 
ents are called to fulfill a higher position in society than 
that in which they are bom" (Cauer — my italics), would 
directly improve the education and prospects of that large 
proportion of upper class children that would remain in 
these schools. And even if we take the point of view 
of the upper-class children as a whole, including those 
dropped out of the higher schools, the loss of the minor- 
ity would be more than covered by the gain of the ma- 
jority. 

For even the calculations of the Prussian school ex- 
perts, such as Drs. Koch and Benda of Berlin, do not 
regard more than 40 or 50 per cent of the students of 
the higher schools as incapable. 2 And, even if half the 
students of these schools were taken from among the 
children of the lower class and were wholly supported 
at public expense, in order to replace the upper class chil- 
dren dropped out, what would be the total effect on the 
relative position of the two classes ? Let us assume that 
the secondary schools graduate something like six per 
cent of the total school population, as in the United 
States. In Germany at the present time these students 
come nearly exclusively from the ruling upper classes. 
If this program were carried out we should have in these 
secondary schools fifty per cent of all the upper class 
children and three per cent of the children of the people. 
This estimate does not pretend to accuracy. But there is 
little chance that any estimate would indicate that this 
reform would give the children of the laboring masses 
one-tenth of the educational opportunities of those of the 
upper and middle class. 

Secondly, such a change as that just suggested would 
probably so greatly increase the efficiency of the profes- 



262 THE STATE SOCIALIST PROGRAM 

sional classes in industry, in science, etc., as to bring an 
increase of productivity to society, and chiefly to the rul- 
ing classes (as long as they rule), that would doubly 
compensate them for the fact that a part of their mem- 
bers were forced either to lower positions or to idleness. 
For not only would the higher schools be improved and 
the more capable fifty per cent of upper class children 
that remained in them work harder, but the lower class 
children promoted, being, according to my calculation, the 
most capable three per cent of the total, or according to 
any reckoning surely not more than ten per cent, would 
be the very cream of the cream of the lower classes and 
would greatly increase social efficiency. 

And, finally, the German Socialists' school reform will 
only be introduced by degrees. It will be long before 
secondary education is made "genuinely available" even 
to that proportion of the masses I have mentioned. 
Schulz is delighted that even a third of the pupils of those 
British secondary schools subsidized by the state are 
required to come from the common schools — though 
very few upper class children, if any, are thus misplaced. 
For this proportion (one-third) is far greater than in 
the German schools. 2 And the provision of board and 
lodging, which is far more important than the mere free 
tuition provided by the British government, will be still 
more gradually increased. This means the favoring only 
of the upper layers of labor. As long as the govern- 
mental provision is small and inadequate it will open the 
schools almost exclusively to the children of the lower 
middle class ; when this provision is, say, half enough to 
maintain the child, it will open the schools not only to this 
class, but also to the children of the aristocracy of labor, 
and when the latter hold the balance of power in society 
they will try to prevent the public school maintenance 
fund from increasing beyond this point. For this they 



THE STATE SOCIALIST PROGRAM 263 

will have two motives : to save the government's money 
in order to use it for other expenditures from which they 
secure the chief benefit, and to preserve the privileges of 
their children and prevent them from being reduced to 
competition on the common level, i. e., the level of equal 
opportunity, whence they would find their true place 
solely according to merit. 

As long, then, as the German Party says nothing 
about the number of children to be promoted and the 
number to be excluded from the governmental secondary 
schools, nor gives any principle for determining this ques- 
tion, it practically serves "the aristocracy of labor" like 
the rest of its program, and it does nothing to increase 
the relative income, opportunity, or power of the laboring 
masses, when compared with those of the classes above 
them — though it will, of course, bring to these masses 
considerable positive benefits, just as the other reforms 
of State Socialism will. 

If we look at the principles approved of by the Mann- 
heim Congress of the German Party in 1906 we find no 
concrete advance. As in the Erfurt program, the pre- 
amble has some definitely Socialistic principles. Indeed, 
in this instance it is wholly Socialistic (see Chapter 
XVII). But the concrete demands are wholly State, So- 
cialistic, not even going as far as the Erfurt program. 
Of its twelve paragraphs six, indeed, refer to the most 
ordinary demands of the progressive capitalists, already 
well advanced towards accomplishment in several coun- 
tries. The other six are also advocated by many pro- 
gressive capitalists, though, being somewhat radical, 
they may not be completely carried out until the begin- 
ning of State Socialism. 

The program of the Socialist Party of the United 
States has a triple advantage over that of Germany. 
It was made twenty-one years later (in 19 12) ; it is based 



264 THE STATE SOCIALIST PROGRAM 

on the economic conditions of a country economically 
more advanced than Germany, as Kautsky concedes ; and, 
finally, the institutions of political democracy are more 
developed here, so that the two years immediately pre- 
ceding 19 1 2 had already been marked by a considerable 
progress in some of those very social reforms most ap- 
proved by Socialists. While the American platform is at 
many points similar to the German, then, it differs pro- 
foundly at other points. 

I shall not discuss the preamble. The American 
phrases are even less radical than the German. On the 
other hand, in the really important matter, the concrete 
measures proposed, the Americans are far more radical. 
One extremely important measure is purely Socialistic, 
another is intended to be Socialistic, while a third goes 
far into State Socialism, and would undoubtedly pass 
over into Socialism in the process of being carried out. 
The other forty-four reforms are almost entirely those 
of progressive capitalism. But, though more numerous, 
they are less important than the three points just men- 
tioned, so that State Socialism and Socialism, after all, 
play a very large part in this program. 

Before discussing these three points, a very important 
fact must be noted. Instead of trying to discriminate be- 
tween Socialist, State Socialist, and State Capitalist mea- 
sures, the program confuses them all together — un- 
doubtedly by intention. For the closing paragraph 
speaks of measures of relief which the Socialists may 
be able "to force from capitalism," implying that all the 
reforms proposed are Socialistic. However, this para- 
graph had preceded the concrete measures of the previous 
program (that of 1908) instead of less conspicuously 
following it as now. At the head of the present program 
we now find the statement that the reforms proposed are 
merely "to strengthen the working-class in its fight" for 



THE STATE SOCIALIST PROGRAM 265 

Socialism and "to increase its power of resistance against 
capitalist oppression.'' This claims too little for these 
reforms — from a Socialistic standpoint, just as the other 
paragraph claims too much. For at least one of the 
measures proposed would actually carry society toward 
Socialism, while two others would mean the abolition of 
capitalism, even in the semi-collectivist form it is now 
assuming, and the establishment of State Socialism. Let 
me now take up these three measures in detail. 

In the first place, the American Party goes farther 
than that of Germany, or perhaps any other Socialist 
party, in specifying industries that it considers to be ripe 
for collective operation. It names not only the means of 
transportation and communication, banking and cur- 
rency, mines, quarries, oil-wells and water-power, the 
nationalization of all of which is already advocated 
by many progressive small capitalists, but it points the 
way to a yet more radical form of State Capitalism, 
which is still some years ahead of us. For it demands 
the collective ownership of all large-scale industries. 
Non-Socialist radicals have not reached this point, but 
the present attack on trusts is rapidly evolving into an 
attack on all large corporations. Already a trust is de- 
fined by leading progressives as an organization that con- 
trols 40 per cent or even 25 per cent of a given product. 
And this evolution may be made still more rapid by nar- 
rowing the definition of what "a given product" is. For 
every large concern has many grades and forms of out- 
put in which it has a practical, or even an absolute, 
monopoly. 

But the American program takes another and still more 
radical step in State Capitalism. The nationalization of 
industry is to be furthered by devoting to this end all the 
proceeds of graduated income and inheritance taxes. 
And, if this process were continued indefinitely, it would 



266 THE STATE SOCIALIST PROGRAM 

not only result in the nationalization of all large-scale in- 
dustries and of all that produce "social necessities" (an 
expression used in the preamble and referred to below), 
but it would gradually extinguish the debt which the pur- 
chase of industries entailed. This would deprive private 
capital of a vast field of investment, lower the rate of 
interest, and increase competition and evolution towards 
large-scale production in those industries that remained 
in private hands. In other words, this policy would in- 
sure the predominance of public ownership over private 
capitalism, i. e., it would go beyond State Capitalism and 
would establish State Socialism. 

The evolution of State Capitalism into State Socialism 
is also provided for in another feature of the program. 
The industries mentioned are not only to be govern- 
mentally owned and operated, but they are also to be 
"democratically managed/' At first this may possibly 
spell State Capitalism in such countries as America, where 
wage-earners are perhaps not yet a majority of the voting 
population, but the evolution of industry will soon make 
the wage-earners and related groups a majority (if this 
day has not already arrived). And then democratic 
management or majority rule would mean State Social- 
ism, for it would definitely put the balance of power in 
industry into the hands of the aristocracy of labor. 

And, finally, it is proposed to take certain steps towards 
collective ownership of "social necessities." To be sure, 
it is stated in the preamble that such necessities are "so- 
cially produced,' ' that is, produced on a large scale, and 
this policy is to be extended, not to the production of 
food and such "social necessities," but to "grain eleva- 
tors, stock-yards, storage ware-houses" and other distrib- 
uting agencies — the so-called middle-men. It is, never- 
theless, stated in this connection that the purpose is "to 
reduce the present extortionate cost of living." If this 



THE STATE SOCIALIST PROGRAM 26j 

is, indeed, the single consideration, or even the main con- 
sideration, and not the increase of the profits of agri- 
culturists, as we might gather from these specific in- 
stances to which this policy is at present restricted, we 
may safely assume that the carrying out of these first 
steps will inevitably lead to other steps in the same direc- 
tion. For example, the German Social Democrats de- 
mand, in their election appeal of 1912, "the transforma- 
tion of great estates into communal holdings, thereby 
making possible a greater food supply and a correspond- 
ing lowering of prices" and "the establishment of public 
farms." This operation of large farms by cities, states, 
or nations would follow quite naturally after the more 
and more rigid control of their food supply that is al- 
ready to be noted in many European cities, and will, no 
doubt, be adopted by the American party. 

There are a number of features of the American pro- 
gram, it is true, which suggest that agriculturists as a 
whole (including small capitalist employers) are appealed 
to even more than industrial wage-earners. This is un- 
doubtedly the effect of this part of the program on the 
general public in agricultural sections, and the agrarian 
elements of the party in Oklahoma and Texas — which 
are in every essential feature like some of the European 
anti-Socialist peasant parties (as their state platforms 
show) — are amply satisfied with it. On the other hand, a 
large majority of the members of the Indianapolis 
(1912) convention explained that their intention was to 
favor the agricultural wage-earner wherever a conflict 
with farmer employers arose, and this is undoubtedly 
how the overwhelming majority of the party members 
understand the present program. 

The preamble, however, is careful to attribute the high 
cost of living not to the tremendously increased profits of 
a large part of the agriculturists, but solely to the agri- 



268 THE STATE SOCIALIST PROGRAM 

culturists' enemy, the trusts. In several places also it 
attacks "plutocracy" instead of capitalism, thus appro- 
priating the old Populist expression and idea. But the 
strongest evidence that the platform is essentially agra- 
rian is the use of the ambiguous expressions on the ques- 
tion of private vs. public land ownership, which has be- 
come doubly important since the increase of land values 
has been almost identical with the rise of agricultural 
prices, of which it is the immediate cause. The pro- 
gram demands: "the collective ownership of land wher- 
ever practicable, and, in cases where such ownership 
is impractical, the appropriation by taxation of the an- 
nual rental value of all land held for speculation or ex- 
ploitation" (my italics). Party discussions before and 
after the Convention leave no doubt that this last word 
means, to the large majority of Socialists, "exploitation 
of hired labor." But some, at least, of the framers of 
the program have been satisfied that the words "of hired 
labor" were not added, though fully aware that to the 
farmer-employer and the public generally the word "ex- 
ploitation," if clearly understood at all, would be taken 
as merely strengthening the word speculation. In this 
interpretation the rental value would be taxed away only 
in the case of landlords, or those who had bought farms 
to sell for speculation. The agriculturist who was pres- 
ent and superintending his enterprise might have a thou- 
sand hired laborers and not be covered by this clause, as 
a large part of the public understood it. 

A resolution passed by the same Indianapolis conven- 
tion reads : "To prevent the holding of land out of use 
and to eliminate tenancy we demand that all farm land 
not cultivated by owners shall be taxed at its full rental 
value, and that actual use and occupancy shall be the only 
title to land." All four of the expressions I have placed 
in italics strengthen the agrarian interpretation of the 



THE STATE SOCIALIST PROGRAM 269 

party's position. If there is some ambiguity in the last 
two (they might be interpreted as directed against large 
farmer-employers, who did little or nothing with their 
own hands), the first two, which are the ones that ex- 
plain the object of the resolution, leave no doubt. They 
are directed against speculators and landlords, and 
against these alone. 

However, a resolution has not the force of a program 
measure, though it may be as much used in campaigns 
to secure public support — and votes. We may safely 
assume that the party organization will sooner or later 
be forced by its members, three- fourths of whom are in- 
dustrial wage-earners, to definitely abandon State Capi- 
talism in this absolutely crucial question and to take up 
the State Socialist position — demanding the govern- 
mental appropriation of the land rent or land capital of 
all farmers excepting only those who do all (or nearly 
all) of their own labor, and at least beginning the 
municipalization or nationalization of other agricultural 
capital, by the establishment of large municipally and 
nationally operated farms — with the prime object of 
reducing the cost of living — but also in order to fur- 
nish desirable employment to every kind of agricul- 
tural talent, and especially to labor, thus gradually rais- 
ing agricultural wages. This will not only mean a rapid 
and continuous decrease of the total number of small 
capitalist farmers, especially of those who employ labor, 
and the transformation of State Capitalism (which is 
built mainly upon them) into State Socialism, but it will 
bring the latter form of society to that advanced stage 
where Socialism also becomes practicable. 

But, most important of all, the American Socialist pro- 
gram contains a policy that is purely Socialistic. It de- 
mands the "shortening of the working-day in keeping 
with the increased productiveness of machinery." If 



270 THE STATE SOCIALIST PROGRAM 

this were done, the constant increase of the profits or 
other income of the ruling-classes, which would other- 
wise continue, both under State Capitalism and (as far 
as income is concerned) under State Socialism, will be 
effectively checked, and the chief benefit of progress will 
begin to go to labor. Obviously neither the small capi- 
talists nor the aristocracy of labor will allow this policy 
to be put into practice, as long as they rule. But it gives 
Socialism at once a sure means of checking the growth 
of class-rule at a later stage of social evolution and an 
immediate goal and measure of present success. For 
only in proportion as we approach this goal to-day, do we 
draw near to the time when we will begin to progress in 
the direction of a Socialist society. 

Obviously, the party may some day prefer an increase 
of real wages (not of mere money wages, of course) to 
a decrease of hours, especially after the reduction of hours 
will have reached a certain point, say the 44-hour week (8 
hours a day, and 4 hours on Saturday). A shortening 
of hours is at present preferred to an increase of wages, 
both because it is at present more needed, and because 
it avoids the increased cost of living that so often fol- 
lows increased money wages. But the principle is the 
same. And, if later an increase of real wages is de- 
manded, also in keeping with the "increased produc- 
tivity of machinery," this would evidently help quite as 
much as a shortening of hours to check the further in- 
crease of exploitation under State Capitalism and State 
Socialism. 

When industry is largely operated, or even largely 
controlled, by government, the wage question becomes a 
political question — indeed, it becomes the political ques- 
tion — and will have to be definitely treated in the Socialist 
program. There is no reason to suppose that any Social- 
ist party — even under State Capitalism, when as yet only 



THE STATE SOCIALIST PROGRAM 2? I 

the small capitalist members of the party will have gone 
over to the government and the aristocracy of labor still 
remains in the party — will refuse to extend this demand 
for shorter hours to read as follows: "We demand an 
increase of real wages and a shortening of the working 
day, distinctively in advance of the increased productive- 
ness of machinery." Every step in this direction would 
lead us towards a Socialistic society, and when we had 
gone a certain distance on that road, we might say, not 
only that we were moving towards Socialism, but that 
we were actually taking steps in Socialism. (See Chapter 
XVI.) 



CHAPTER XV 

NATIONALISTIC SOCIALISM 

History does not move backward, certainly not at 
this late day, and internationalism will grow steadily 
stronger, though taking new forms under State Capital- 
ism and State Socialism. The older nationalisms will 
disappear, and other forms of economic competition along 
national lines will at first take their place. Already the 
Labour parties are thoroughly nationalistic, and in pro- 
portion as Socialist parties are given over to State So- 
cialism they also have become nationalistic. State So- 
cialism, then, will bring a new nationalism, but even be- 
bore State Socialism can be transformed into Socialism 
the laboring masses of the world will have been united in 
a new internationalism. 

When the laboring masses were peasants, or agricultu- 
ral serfs, perhaps the most effective way of keeping them 
down was through wars and militarism. These were 
made possible either by the ignorant hatred of one race 
of peasants by another, or by the complete lack of any 
common economic bond between them, which was due to 
poor transportation and communication. But the revo- 
lution in transportation and communication, which passed 
its climax in America and Europe within the present 
generation, and is now beginning in Asia, Africa, South 
America, and Australia, is rapidly reversing this condi- 
tion. Unskilled labor has now found a world market. 

Its mobility immensely increases its powers and oppor- 

2.72 



NATIONALISTIC SOCIALISM 2*J$ 

tunities, as it is able to go economically half way around 
the world for employment and in a few weeks' time. 
The most rapid world wide development of the pres- 
ent form of Capitalism, of State Capitalism, and of State 
Socialism seems to require that this mobility should be 
preserved. But the interests of the small capitalists and 
skilled workers of the nations threatened by a large in- 
vasion of such labor require that it should be artificially 
and forcefully restricted. For if it is not checked, com- 
petition in the small farms or businesses and in manual 
or mental skill will be greatly intensified. 

Neither under State Socialism nor under State Capi- 
talism, however, will the laboring masses of the country 
invaded be to the same degree perturbed. They will 
know that unskilled and semi-skilled labor, domestic or 
foreign, will be paid efficiency wages, neither more nor 
less. So, while all the labor unions and Socialist parties 
under the control of the aristocracy of labor favor cer- 
tain checks on immigration as soon as it begins to be 
large, those unions that are controlled by the unskilled 
have often displayed no such hostility. Of course immi- 
grant labor is nearly always of a somewhat different, and 
sometimes of a widely different, race and this is used as 
the pretext against it, but the skilled workers nearly al- 
ways themselves explain that it is solely "a lower eco- 
nomic standard'' to which they are opposed. So both the 
older unions and "Labor" parties in America and all 
English-speaking colonies have taken a stand either 
against Asiatic or against colored labor or against both — 
and in no country have they developed any thorough or 
effective co-operation with such different races. 

The leader of the British Labour Party, a member also 
of a Socialist Party, argues, on a racial pretext, that 
India should remain indefinitely under British tutelage, 
and his views are typical of the former organization, 



274 NATIONALISTIC SOCIALISM 

The question is, can the Labour Party persuade the 
masses of the British workers that it is to their interest 
that the East Indians should remain indefinitely in the 
arbitrary power of the governing classes of the British 
Empire, whether these governing classes are large or 
small capitalists, or aristocracy of labor? India is one of 
England's chief sources of food and clothes (cotton). A 
lower cost of living is important to the laboring masses, 
but it is scarcely as important as the need of allies (do- 
mestic or foreign) against the ruling-class, or as the de- 
struction of the whole military and imperialist structure 
that is the chief obstacle — aside from class privilege it- 
self — to the development of industrial democracy. 

Already the most aggressive anti-militarism every- 
where is among the radical wings of the Socialist parties 
and labor unions. Not all the agitation against militarism 
and war, however, is that of the laboring masses. In 
so far as it is levelled against the mere financial cost of 
armament, it chiefly concerns skilled laborers and small 
capitalists, for the unskilled and semi-skilled expect to get 
no more than efficiency wages in any event, and of these 
they are assured, so that they do not pay the armament 
bill. Moreover, a good deal of anti-militarism (such as 
that of France) is merely a survival of the desperate in- 
surrectionism of artizans, craftsmen and other decaying 
social classes, and is in reality directed neither against 
armies nor against war, but against existing governments 
— these classes being unwilling or unable to wait until 
State Capitalism, having evolved into State Socialism, 
gives them their opportunity — which opportunity even 
then will have little in common with their revolutionary 
"general strike." But this agitation, whatever its motive, 
undoubtedly draws its chief force from the fact that the 
laboring masses have little to gain, either from war or 
from militarism, and everything to lose, 



NATIONALISTIC SOCIALISM 275 

It is different with the aristocracy of labor. In propor- 
tion as a country has colonies, as the vote at the In- 
ternational Congress at Stuttgart shows, the aristocracy 
of labor in that country favors colonies — and their de- 
fense. The Congress was evenly divided on the question. 
Where a large navy is everything to an empire, as in 
Great Britain, the most that the leading Laborists re- 
quire is that it should not be increased. And where the 
armies are large, as on the Continent of Europe, it is pro- 
posed merely to change their form but to retain universal 
conscription — while the German Party has even voted 
money for an increase of the present army. (See Appen- 
dix C.) And, finally, we have the Labour Party of i 
Australia in favor both of conscription and a large navy, 
in order to prevent other races from sharing in the de- 1 
velopment of the sparsely populated Australia. For the 
aristocracy of labor have property to protect, namely, 
their skill and their positions. 

But may not Laborism or State Socialism, in a country 
like Australia, allot to the unskilled something more than 
an efficiency wage in order to give them also a stake in 
the country and arouse their "patriotism"? This is pos- 
sible and, in some countries, even probable. But such a 
policy would be very costly, both on account of the in- 
creased cost of labor and because it would so seriously 
hamper the nation that adopted it in international indus- 
trial competition that other nations would soon leave it 
so far behind in military strength that it would soon be 
defenseless. 

Moreover, no nation is any longer economically inde- 
pendent. If the import of the unskilled labor needed for 
a country's development is much interfered with there 
will be a corresponding export of capital If labor is 
not allowed to come to capital, capital will go to labor. 
Nor is this artificially stimulated exportation of capital 



2j6 NATIONALISTIC SOCIALISM 

an evil from the point of view of the laboring masses of 
the world. It retards the development of the most de- 
veloped countries, but it advances the development of the 
least developed countries in the same proportion. It thus 
directly serves the development of humanity. But it also 
serves humanity in another way. For the undeveloped 
countries not only hold back the masses in those coun- 
tries, but they also furnish the plunder for all imperialism 
and the pretext for most militarism. Nor is this all, for 
their helplessness is used — with a certain measure of suc- 
cess — to corrupt the laboring masses of imperialistic na- 
tions by persuading them to accept certain benefits at 
the tragic expense of other peoples, who are kept— 
whether in Africa, Asia, or South and Central America— 
in a semi-servile condition. And it is only the unde- 
veloped state of neighboring countries that brings a part 
of the masses of Australia to think they can keep that 
country nine-tenths empty because they came there a few 
years earlier — whereas their only real claim, in the court 
of laboring masses of the world, is that they should be 
amply compensated for the exceptional labors and hard- 
ships of first settlement. 

The international phase of social evolution is the most 
basic of all for the reason that unskilled labor will never 
form the same proportion of every nation, but will remain 
very unequally distributed. When backward countries 
are developed the unskilled and semi-skilled, together with 
small peasants, may cease to form ninety per cent of the 
population as they now do. If their development is con- 
stantly accelerated, Russia, China, India, and Mexico may, 
within two or three or four decades, show only seventy- 
five or even sixty per cent of this kind of population, and 
may have advanced through State Capitalism to the verge 
of State Socialism. But, in the meanwhile, countries that 
are industrialized to-day will be still more industrialized, 



NATIONALISTIC SOCIALISM 2JJ 

and in all these the laboring masses will have become a 
minority, if a large one, while in some countries, of 
which Australia and Great Britain (also Holland and 
Belgium) are types, there may be a sort of imperialistic 
industrial democracy, in which even the children of the 
lower ranks of labor are given some approach at least 
to equality of opportunity — at the expense of the laboring 
masses of colonies or of economically subjected countries. 

In a word, the laboring masses of the world, those 
doing the unskilled and semi-skilled work, may be located 
chiefly in certain countries — those that are now most 
backward. And the population of certain other countries 
may be classed almost wholly, or even wholly, among the 
aristocracy of labor. This will not change the problem of 
social evolution as I have described it, since I have shown 
throughout that it is fundamentally economic in nature 
and not political (in the narrow or national sense). Ob- 
viously, it would make no fundamental difference in the 
questions I have discussed if, in a given country, the 
aristocracy of labor inhabited one section and the labor- 
ing masses another. Nor is there any fundamental dis- 
tinction if the division is along the lines of national boun- 
daries. 

Now, does this mean that the final form of the class 
struggle will be largely between nations, and that nation- 
alism will be the last defense of State Socialism against 
Socialism? Let me point out briefly the position of the 
State Socialists (avowed Laborites and Laborites who go 
under the name of Socialists) on this question. 

At the International Socialist Congress at Stuttgart 
in 1907 the resolution against war, a result of prolonged 
discussion, was in its most crucial part, as follows : 

'Wars are part and parcel of the nature of capitalism; 
they will cease only when the capitalist system declines, 
or when the sacrifices in men and money have become so 



2?8 NATIONALISTIC SOCIALISM 

great as a result of the increased magnitude of armaments 
that the people will rise in revolt against them and sweep 
capitalism out of existence. . . . The Congress there- 
fore regards it as a duty to impress on the working 
classes, and especially on their representatives in all par- 
liaments, the absolute necessity of opposing all naval and 
military armaments and to refuse funds for their up- 
keep." 1 (My italics.) 

It is true, as Marx says in the Communist Manifesto, 
that in proportion as domestic exploitation decreases in- 
ternational exploitation will probably decrease also. This 
is a basic truth — and a tremendously important one. But 
it does not follow from this that international exploita- 
tion cannot diminish before Socialism has begun to di- 
minish domestic exploitation. 

If the nations are to remain in conflict as long as 
capitalism lasts, it is only one step, and an unavoid- 
able one, to the position that Socialism must be 
achieved by each nation separately, that the property of 
the more "Socialistic" countries must be defended as 
against the others, and that armies must be maintained 
for that purpose. The Laborites and Laborite Socialists 
have not hesitated to draw this unavoidable conclusion 
and definitely to assume a position so thoroughly in ac- 
cord with the interests of the aristocracy of labor and 
with "patriotism," and so popular with a large part of the 
voters. 

Several Socialist Parties, like that of Germany, have 
already gone far in the direction of nationalism. (See 
Appendix C. ) These have repudiated the Stuttgart reso- 
lution above quoted, though they have not yet succeeded 
in capturing an International Congress. Bernstein, for 
example, teaches that, while individual private property 
should not play a dominant role in the society of the 
future, the private property and vested interests of a. 



NATIONALISTIC SOCIALISM 279 

nation should do so. "The workman who has equal rights 
as a voter for state and local councils," he says, "and 
who thereby is a fellow-owner of the nation, whose chil- 
dren the nation educates, whose health it protects, whom 
it secures from injury, has a fatherland." 2 Yet Bern- 
stein denies this geographical or sectional right of owner- 
ship to all governing units of a smaller size than the na- 
tion, and it devolves upon him to show us how, as to 
rightful titles of ownership, there is any necessary or real 
distinction between the nation as part of the world and 
the local government as part of the nation. "We can 
as little grant to the district," says Bernstein, "an uncon- 
ditional and exclusive right to the soil as we can to the 
individual. Valuable royalties, river rights, etc., belong, 
in the last instance, not to the parishes or the districts, 
which, indeed, only are their usufructuaries, but to the 
nation. Hence an assembly in which the national, and 
not the provincial or local, interest stands in the fore- 
front claims the first duty of representatives, appears to 
be indispensable, especially in an epoch of transition." 
May we not equally well substitute the word "interna- 
tional" for "national" and the words "national" for 
"provincial" or "local"? Is not an international assem- 
bly to deal with great and growing economic questions 
that must be solved in common by the great nations 
equally indispensable to the interests of the laboring 
masses? Are not national rights to the soil as inadmis- 
sible and as destructive of all equity as the so-called 
rights of a district, and on the same grounds? 

Yet this small capitalist and Laborite form of national- 
ism is bound — for several decades at least — to sweep all 
before it and to counteract or postpone capitalist and So- 
cialist tendencies towards internationalism. Already the 
incoming State Capitalism is immensely reinforcing na- 
tionalism. State Socialism will reinforce it still further. 



28o NATIONALISTIC SOCIALISM 

Until recently internationalism has had a great growth — 
through two causes, both of them growing weaker now. 
First, the large capitalists were gradually becoming inter- 
national — we have had international financiers and inter- 
national trusts largely directing the fate of nations. As 
small capitalists' governments begin to control finance 
and industry along national lines this internationalism 
gives way to the most intense "patriotic" and militar- 
istic nationalism. The promotion of business is then 
"our" national or patriotic concern. The small capi- 
talist majority all consider themselves rightly as being 
shareholders through their control of government, and 
like other shareholders are ready to allow their agents 
to go to any length of crime or bloodshed for greater 
dividends. So, for example, did the small capitalists of 
France rescue the Czarism financially — on patriotic 
grounds — and now, to protect their investment, defend 
every bloody infamy of the Czar. 

The large capitalists, when not internationalists, were 
imperialists. Now imperialism, the seeking of colonies 
or privileges in trade or investment, may be semi-inter- 
national. So we have, in China, Turkey and elsewhere, 
frequent Concerts of the Powers — which means a co- 
operation of all leading nations, except those being preyed 
upon. Small capitalist governments, like that of the 
United States, are less interested in such Concerts. They 
cannot hope to make large enough gains from colonies, 
protectorates or exploited peoples to pay for the arma- 
ments needed for imperialism (e. g., the present Ameri- 
can policy in China, Mexico, etc.). They are interested 
rather in protecting what they have at home. Examples 
are the tendency of the United States and Australia to 
protective duties, to restriction of immigration (largely 
against those who become small producers or shopkeep- 
ers), and to laws against alien land ownership. There 



NATIONALISTIC SOCIALISM 28 1 

is nothing even semi-international about this, and far 
less chance for agreements with other nations — unless 
among neighboring countries which really form a single 
economic unit, and are inhabited or owned largely by 
the same persons — i. e., are on the road to becoming a 
single nation. 

And with the internationalism of the large capitalists, 
who, until recently, seemed about to possess the earth, is 
passing the internationalism of the working class. When 
the labor unions and so-called workingmen's parties were 
thought to represent the unprivileged — and did so to a 
greater extent than they do to-day — they stood for inter- 
nationalism. For the unprivileged pay the chief costs of 
war, in their blood, and get the least gains — sometimes 
a slight gain perhaps, but usually accompanied by a re- 
version from democracy towards militarism. But the 
skilled laborers gain more — their labor privilege rises in 
value with the commercial success of their country. 
Moreover they have something to defend. They want 
industry to keep its foreign markets and they want to 
exclude immigrants from competing with them. And 
under State Capitalism they do not want to share their 
government and privileges even with such immigrants as 
are admitted. So in Australasia old age pensions, etc., 
are given only to those who have been a certain time in 
the country. 

And when Laborite or State Socialist governments are 
established, this class becomes even more nationalistic, 
quite as much so, indeed, as the small capitalist under 
State Capitalism. For the aristocracy of labor are then 
also admitted to be shareholders in the nation's indus- 
tries, and also in the land. Governed by the motives 
Bernstein defends, they will above all seek to monopolize 
the home market and keep international trade at a mini- 
mum. They will occasionally go farther and even seek, 



g82. NATIONALISTIC SOCIALISM 

or defend, a monopoly of certain foreign markets by 
force of arms — though, as I have said, they will find this 
imperialism costly, and, as it cannot be as profitable to 
them as it has been to the large capitalists, they may soon 
abandon it. 

In a leading organ of the opportunist Socialists of 
Germany, for example, there appeared a few years ago 
the argument that Socialism could only grow with an in- 
crease of the working class, that the working class could 
not grow without an extension of industry, that industry 
could only extend itself farther through foreign markets, 
and that foreign markets could be won and held only 
by the sword. 

Those who want colonies forcibly retained are as yet 
in the minority among Continental Socialists, but this 
policy has many prominent Socialist adherents in all 
those countries whose colonies are at ail valuable, in- 
cluding not only Vandervelde in Belgium and Von Kol 
in Holland, but Bernstein, David, and many others in 
Germany. Indeed, when it came to a vote at the Socialist 
Congress at Stuttgart, not only a large majority of the 
British and half of the French delegation voted for the 
colonial policy, together with the parties of Belgium and 
Holland, but the very powerful German and Austrian 
parties also. 

The stronghold of imperialism and colonialism in the 
Socialist movement, however, is among the Laborites of 
Great Britain. When Keir Hardie once went so far in 
the anti-imperialist direction as to say that what is good 
government for Canada is good for India, Arnold Foster 
reminded him that the loss of India would mean not 
only a loss of trade, but also increased prices for 
bread and tea, and loss of employment to hundreds of 
thousands of men and women in Great Britain who pro- 
duce goods for exportation to India and to tens of thou- 



NATIONALISTIC SOCIALISM 283 

sands who live by manipulating and distributing them. 

It is because the imperialism of Great Britain has been 
thus so frankly building its nest in the people's pocket- 
books and is so closely connected both with employ- 
ment and a low cost of living, as well as with new 
markets and profitable investments, that it has become 
such an universal aad irresistible force among all social 
classes. In that country where imperialism is at its 
height and where imperialists lead every reactionary 
movement and are the most formidable opponents of 
democratic progress, one might expect the opposition to 
imperialism to be strongest also. But the contrary is the 
case. The movement for peace in Great Britain and 
against military expenditure and imperialism is, at the 
bottom, weaker than in any other country, one of the 
Socialist parties being tainted with colonialism and the 
other with militarism. 

Keir Hardie, for example, has revised his previous 
position, and, in spite of sensational statements to the 
contrary, now takes an attitude towards India which it 
is somewhat difficult to distinguish from that of the 
present Government, and certainly is not as advanced as 
that of some of the Radicals and especially of some of 
the Irish members of Parliament. His chief concern 
now is that the integrity of the Empire should be pre- 
served, as he emphasizes this again and again in the con- 
clusion of his recent book. He advocates certain mod- 
erate reforms in India, but chiefly those that "will bind 
the people more closely to us and lead to their becoming 
a loyal self-governing part of the Empire." "Repres- 
sion," he continues, "will only intensify their determina- 
tion to secure self-government, and may lead finally to 
the loss of what has been described as the brightest jewel 
in the British crown." 3 (Italics mine.) He insists that 
the Indian people will be loyal "if they feel that their 



284 NATIONALISTIC SOCIALISM 

grievances are being acknowledged and redressed. " 
Again he writes : 

"We have responsibilities not only to the people of 
India, but also in the face of Europe; for if unrest 
spreads throughout India a conflagration may one day 
break out in China, Japan, or even nearer home, which 
will set India ablaze and burn up the last vestige of 
British rule." 4 

It would appear to many people, outside of Great Brit- 
ain, that nothing could be more desirable than that the 
Indian people should become disloyal, should assert their 
manhood and put an end to British rule. 

The position of other leaders of the Labour Party is 
still more backward. MacDonald, for instance, attrib- 
utes the decrease in England of the popularity of peace, 
international fraternity, and the proposal to reduce arma- 
ments, not to the imperialism of the British, but to that 
of other nations. "The Rulers of Russia and Germany," 
he says, "have thrown back progress, the one has crept 
towards India, the other has put Dreadnaughts on the 
North Sea." 5 MacDonald thinks to save the Socialism 
of this statement by saying that these imperialistic moves 
have not been the expression of the free will of peoples, 
but of governments. He overlooks the fact that Eng- 
land is drawing untold special profits from the results of 
past conquests, and that until she relinquishes these priv- 
ileges the people of other nations have a right to demand 
a share, and that Great Britain has a purely imperialist 
motive in standing for peace and the status quo. 

MacDonald has written at greater length and devel- 
oped a more detailed international policy than any other 
prominent British Socialist. His first and fundamental 
defense of imperialism is that a great empire ought to be 
able to develop a beneficent policy for its colonies even 



NATIONALISTIC SOCIALISM 285 

when the latter are not given, in the ballot, effective con- 
trol over their own government ; and he does not hesitate 
to say that in India a majority of all important govern- 
ment bodies should be white. The tropical people, he hu- 
manely concedes, are "to be treated as human beings," 
but the government is to assume responsibility for them. 
Such principles are of course fundamentally identical 
with those of all imperialists. MacDonald's elaborate 
apologies give us a deep insight into this Laborite im- 
perialism. He writes, for instance : "The world is the 
inheritance of all men. Tribes and nations have no right 
to peg off parts of the earth and separate them from 
the rest as much as though they had been withdrawn to 
the moon." He wishes this principle to be applied ex- 
clusively against the natives, however, and not for them. 
Where the colored races wish to emigrate into white 
countries the principle does not apply, for "the power to 
exclude undesirable immigrants, to classify whole races 
amongst these undesirables, and to control in other ways 
the conditions of immigration, may be exercised by the 
self-governing States without in any way violating those 
imperial traditions which, as democrats, we desire to pre- 
serve.' , 6 

MacDonald does not fail to see the danger of this con- 
tradiction, and of his practical assertion of the right of 
the white race to one law while it applies another to the 
colored, and he does not shirk the prediction that the 
result will probably be war — "The position therefore is 
that both sides are striving for self-preservation, and 
war is not at all an unlikely eventuality." 7 

This spokesman of the aristocracy of labor does not 
believe that democracy can ever be established among 
"natives." "The democracy of these northern lands is 
probably native to the soil and to the race. To go with 
it north, and south, east and west, as though it were the 



286 NATIONALISTIC SOCIALISM 

inevitable end of all government, is to make a fetish of 
it." 8 Nor does he see any way by which these funda- 
mental differences, which prevent the development of 
democracy in the colored races and threaten war, can be 
made less by friendly intercourse. He is opposed to any 
intimate social relation, such as prevails in South Amer- 
ica, on the ground that race mixture is an evil, and he 
bases his criticism of the imperialism of the past on the 
proposition that it did not go far enough, that "the essen- 
tial differences between peoples . . . was not recog- 
nized." 

MacDonald apparently is not in favor of materially 
decreasing the national armament. Rather it would seem 
that his position is not dissimilar to that of those British 
peace advocates who hope to preserve and strengthen the 
British Empire by preserving the present armament with- 
out increase if the other nations can be persuaded to 
accept the present British naval superiority. "Nor should 
we necessarily regard the armaments required for the 
security of the Empire as nourishment for the spirit of 
militarism," he writes. "It is not armaments that pro- 
duce militarism but the political spirit behind the arma- 
ments. Moreover, a nation which divides its territory 
will not in consequence divide, but multiply, its arma- 
ments." 9 In other words, sufficient armament must be 
had to make the British Empire safe, because, if it were 
defeated and divided, still greater armaments might be 
the result. 

Most astounding and most ominous is the consignment 
of the unskilled workers of the British Empire to a posi- 
tion of permanent subjection by Mr. and Mrs. Sidney 
Webb. One of the gravest social dangers, according to 
these authorities, is the diminishing birth rate among 
the "higher" classes of the "higher" races. The result 
is that "into the scarcity thus created in particular dis- 



NATIONALISTIC SOCIALISM 287 

tricts, in particular sections of the labour market, or in 
particular social strata, there rush in the offspring of the 
less thrifty, the less intellectual, the less foreseeing races 
or classes — the unskilled casual labourers of our great 
cities, the races of Eastern or Southern Europe, the 
negroes, the Chinese — possibly resulting, as already in 
parts of the United States, in such a heterogeneous and 
mongrel population that democratic self-government or 
even the effective application of the policy of a national 
minimum of civilized life will become increasingly un- 
attainable." 10 

Yet it is chiefly if not wholly upon these very races 
and classes, as against the aristocracy of manual and 
mental labor of such a country as Great Britain, that 
Socialism and democratic progress must one day depend. 

To advance civilization and keep "the guardianship of 
the non-adult races" in the right hands, there is no means 
so valuable as the British Empire — according to these 
British "Socialists." The Webbs say that "in the very 
nature of things, States do not profit by stealing from 
other States, whether what they steal is territory, popu- 
lation, or money." But this does not apply, it seems, to 
the way the British Empire was acquired, nor is it appar- 
ently any reason why India or Egypt, even after prepara- 
tory steps, should be given their independence. "Private 
enterprise and the desire for riches are no more to be 
trusted with the weaker races now than before," we 
read. 11 But the classes that control or will soon control 
Great Britain, the Webbs hold, are, or will be, free, or 
comparatively free, from such selfish motives. These 
classes are going to legislate for the "non-adult races," 
"to save them from themselves." Some of these races 
may some day be freed and can now be prepared for this 
freedom. "But, as regards many parts of the British 
Empire, it would be idle to pretend that anything like 



288 NATIONALISTIC SOCIALISM 

effective self-government, even as regards strictly local 
affairs, can be introduced for many generations to come 
— in some cases, conceivably never." 12 (My italics.) 

There is a second Socialist party in England which 
takes a very different position from the Independent 
Labour and Labour parties and Fabian Society that 
' Hardie and MacDonald and the Webbs represent. The 
British Socialist Party, the chief figure of which is H. M. 
Hyndman, not only opposes imperialism and colonialism, 
but stands for the immediate independence of India and 
Egypt, as soon as sufficient movements of revolt have 
developed in those countries; to use the words of Hynd- 
man, the demand is for "abandonment of domination in 
India, Egypt, etc." But in the very paragraph (in the 
syllabus of a recent address) in which this phrase occurs 
we find the demand for "a powerful navy and a citizen 
army," which means the enlistment of the whole ser- 
viceable population of Great Britain. 13 In principle 
Hyndman is a courageous opponent of imperialism and 
if he wishes British military power to be developed it is 
only in order that Great Britain may be able to support 
the democracies of Europe against the reactionary mon- 
archies, Russia, Prussia, and Austria. 

The British Socialist Party, then, stands against im- 
perialism, but a large section of it is for a certain form 
of militarism, while the Independent Labour Party stands 
on the whole against militarism, but for all practical pur- 
poses is for a "defensive" form of imperialism. It is 
taken for granted by the Social Democrats that Germany, 
as now governed, is the enemy of Great Britain, that she 
is "steadily and vigorously preparing for war by land 
and sea." "An attack upon Great Britain is being care- 
fully organized as part of this mature aggression," etc., 
etc. Hyndman and other leading members of the party 
feel that the civilization and political institutions of Great 



NATIONALISTIC SOCIALISM 289 

Britain are, on the whole, so much superior to those of 
Germany that it is worth while to make great sacrifices 
for defense against this "foreign aggression" — "Whether 
this country is worth defending," says Hyndman in Jus- 
tice, "may be a question for the workers who don't own 
a foot of it. But at least, if we are going to fight for it, 
and are compelled to pay heavily for this, let us have 
the means of doing so effectively in the shape of a demo- 
cratic citizen army and a sufficient fleet." 14 

At the 191 1 Conference of the predecessor of the 
British Socialist Party (the Social Democratic Party) 
Hyndman and Quelch won a majority for their 
standpoint. After stating their opposition to wars and 
armament, the resolution declared that the best means 
to carry out the decisions of the International Socialist 
movement were "to maintain a sufficiently strong fleet 
and to bring about a re-organization of our military sys- 
tem on the basis of a national citizen army and the dis- 
continuance of all aggressive imperialistic politics." The 
word "aggressive" even makes it doubtful if India and 
Egypt are to be abandoned, but there can be no mistaking 
the intention to make ready for war on land and sea. 

In the defense of the resolution Quelch said that in 
his opinion the interests of international democracy re- 
quire a strong British fleet, and that the very existence of 
England depended on her domain over the seas. Hynd- 
man said that the Socialists of all countries were for a 
people's militia for defense and that a fleet was to Eng- 
land what a militia was to the Continental states. More- 
over England was bound through treaties to defend the 
independence of the smaller nations, and it would be dis- 
honorable to give over Denmark, Holland, Belgium, and 
Switzerland to the mercy of Prussian attacks. 

It is true that the resolution above quoted remained in 
force for only a few weeks. The Party finally decided 



290 NATIONALISTIC SOCIALISM 

"to oppose strenuously every demand for an increase of 
naval armaments." But there was nothing said about 
decreasing the navy, the proposal of a citizen army was 
affirmed, and nothing" was done to attempt to counteract 
the former declarations of Justice, the Party organ; while 
the minority that was ready to reiterate its imperialism 
was still formidable. 

The Independent Labour Party, on the other hand, has 
declared strongly against a large navy, and against war 
with Germany under any contingencies. It even proposes 
a general strike of transport workers if war is declared. 
At the time of the Morocco Crisis of 191 1, in a mass- 
meeting in Trafalgar Square, Keir Hardie said that the 
English workers must hold themselves prepared, so that, 
if the order for war and the murder of brothers goes 
out, not a soldier or a cannon shall be transported by 
steamer or railway. Do we have a serious movement 
against imperialism, then, headed by this Party? The 
indications are that we do not. The position of the party 
is of the same general character as that displayed in Sir 
Edward Grey's threat that the workingmen would over- 
throw governments if they did not cease to augment 
armaments. The conservative chief director of Great 
Britain's foreign policy, however, is unwilling to sur- 
render one iota of her imperial advantages. He wants 
peace — and is willing that the workingmen should fight 
for it — but on the basis of the superiority of the British 
Fleet and the preservation of the Empire as it is to-day. 
Keir Hardie, at the meeting mentioned, pointed out that 
the workers of the Continent were already ripe for action. 
As long as the workers' movement against war is inter- 
national, and is not accompanied by any demand for the 
readjustment of colonial or other questions between na- 
tions, there can be no doubt that it strengthens the "stand- 
pat" imperialism of Sir Edward Grey. 



NATIONALISTIC SOCIALISM 20,1 

Nor should we overlook the cordial relations that ex- 
isted between the Labour Party and the government dur- 
ing this same Morocco crisis. MacDonald, in the name 
of the Labour Party, made a speech in which he an- 
nounced both its firm advocacy of peace and its de- 
termination to support what is now generally recognized 
to have been the more or less warlike policy of Sir Ed- 
ward Grey. At this critical juncture MacDonald said in 
Parliament that "he hoped no European nation would 
assume for a single moment that party divisions weak- 
ened the national spirit." This declaration, hailed as 
"patriotic" by the British imperialists, was officially re- 
ceived by the German Socialist Party, on obvious political 
grounds, as a satisfactory declaration of internationalism! 
But it has frequently been referred to by the reaction- 
aries of France and other countries as an evidence of the 
"patriotism" of the British workers, as opposed to the 
unmistakable and menacing anti-militarism of those of 
France. 

The Labour Party, like the Liberal Government, stands 
for peace — and the superiority of the British fleet and the 
integrity of the British Empire. The desire to hold their 
colonies for the benefit of the people of the home country 
has led the Dutch Party to a similar attitude, and also 
a part of the parties of Belgium, Germany, and France, 
and one of the two Italian Parties. Even the American 
Party has assumed an attitude towards certain foreign 
races that both these races and all unprejudiced third 
parties can only regard as hostile. For it has adopted 
Asiatic exclusion under another name. (See Appendix 
F.) The astounding story of the repudiation by the Ger- 
man Party of the Stuttgart resolution — which required 
all Socialist Parties "to refuse funds for the upkeep of all 
military and naval armaments" — is too long to tell here 
and has been placed in the Appendix. ( See Appendix C. ) 



292 NATIONALISTIC SOCIALISM 

The philosophers and leaders of the British Laborism 
have as little regard for the backward races as they have 
for the less skilled laborers in their own country. And, 
when Laborism is in power, we may well picture a world- 
wide class struggle of the future when some nations will 
be divided while others are to be found wholly on one or 
the other side. The political philosopher of the German 
Party is considerably more advanced. He does not con- 
template colonies at all. But he does contemplate the 
increase of what might be called economic nationalism, 
the basis of political nationalism. States are to find 
"safety" not in growing economic interdependence but in 
growing economic independence. Each State is to pro- 
duce "all that is actually necessary" and is to exchange 
only "superfluities" with other States. This would bring 
an armed peace indeed, both in a commercial and in a 
military sense. It is hard, indeed, to see how a more 
unstable or dangerous condition could be pictured, espe- 
cially when we remember that for the transitional period 
during which it is being introduced the aristocracy of 
labor, with privileges to protect, will be in power. But, 
even if some of the nations were industrial democracies, 
the case would be little better. Ten million people might 
attempt to bar out all the other billions of the earth from 
some large territory, such as Australia, for example. This 
State might be economically independent, but what dif- 
ference would that make ? 

Kautsky says that under Socialism "exportation and 
importation of products from one State to another will 
fall off greatly." 15 This economic nationalism is not 
a Socialistic but a State Socialist ideal. But fortu- 
nately the tendency is so strongly set the other way 
that there is little danger that the present growing inter- 
dependence of nations may be checked even under State 
Socialism. And this is the only hope also for Socialism, 



NATIONALISTIC SOCIALISM 203 

which depends upon the gradual fusion of the nations, 
first into an economic and then into a political whole. 

State Capitalism and State Socialism are necessarily 
nationalistic in this economic sense, for when private in- 
dustrial enterprise and competition have become insig- 
nificant, and the privileged classes include a majority of 
the population, a large part of the energies of the nation 
will be thrown into the competition of the governmental 
industries with those of other nations. There will be 
competition of nations instead of competition of individ- 
uals. However, this competition, if not excessive, is one 
of the greatest hopes for further industrial progress. For 
just as private competition leads to larger and more effi- 
cient business units, and then to governmental industry, 
so national competition leads first to larger nations and 
groups of nations, then to a more scientific division of 
markets, then to specialization, or the monopoly of cer- 
tain industries by certain nations, and finally to a gradual 
integration of the whole. 

This process will begin with the overwhelming and 
irresistible demand for commercial reciprocity between 
neighboring countries. Genuine reciprocity of the United 
States with Canada is coming soon. The approaching 
small capitalists' democratic collectivism on the continent 
of Europe will surely bring reciprocity between a growing 
number of countries there. For the competition of North 
America and the British Empire will force them towards 
it, and the overthrow of those financiers and large inter- 
ests which have caused all recent war-fevers will result 
almost immediately in this great change — the beginning 
of a greater and greater economic interdependence and 
the end at least of increasing armaments — though by no 
means the end of armies, navies, or perhaps even of war. 

State Socialism, which comes soon after this reciprocity 
movement, will bring a further advance in the shape of a 



294 NATIONALISTIC SOCIALISM 

great decrease of armaments and of the crushing tax 
burdens they place (under the regime of efficiency) upon 
the upper classes, together with the establishment of 
militia systems and the internationalizing of navies, mak- 
ing them more and more an international sea police. This 
is about the extreme limit to which Laborites, State So- 
cialists, and many Laborite Socialists can see, and we 
may take this as one reason, among many others, for 
supposing that it is about the limit of State Socialism. 

Now all this means, as Bernstein's reasoning sug- 
gests, a survival of the principle of private capitalism, 
that is, that the nation feels itself as the owner of the 
land on which it dwells. But to admit this leads in the 
case of many unsettled countries to the most absurd con- 
clusions, conclusions that become utterly impossible as 
the population of the world increases. The interest of the 
majority of the world's population, the interest, at least, 
of the laboring masses, requires the equal development of 
all the earth. And militarism and class rule cannot give 
way to Socialism, except as national ownership and 
national economic independence give way to international 
ownership, and international economic interdependence. 

Similarly an "international" naval police force, as ad- 
vocated by the British Socialists, will surely be used for 
the repression and subjection of those nations and races 
where the laboring masses predominate and their ex- 
ploitation by the races and nations ruled by an aris- 
tocracy of labor. We may even gauge the steps we 
shall have taken on the road from State Socialism to 
Socialism by the gradual decrease of armies — militia or 
otherwise — and of navies, even if they form a single 
"international" police. 

The movements discussed in this chapter have been 
those of the small capitalists and the aristocracy of labor 
and the tendencies described have been those of State 



NATIONALISTIC SOCIALISM 295 

Capitalism and State Socialism. But will there be no na- 
tionalistic influences bearing upon the movement of the 
laboring masses? There are, indeed, two important 
causes that retard the international solidarity also of the 
laboring masses. If a very large part of a nation's 
income is derived from the exploitation of the masses 
abroad, of political colonies or economic dependencies, as 
I have pointed out, some share of the spoil may reach 
even the common laborers of the home country — who, 
moreover, will not be numerous enough to constitute a 
real power, such work as they do being done largely by 
these foreign workers. Or, if the standards of living of 
the laborers of two countries are extremely unequal, those 
with the higher standard will fear the competition of the 
others and go to great lengths against them. The best 
example of the first condition is Great Britain, while 
Australia, the British colonies and the United States best 
exemplify the second case. 

At the present moment, then, the laboring masses of 
the various countries are also widely separated, though 
far less separated than the aristocracies of labor. But the 
political and economic dependence of backward countries 
is bound constantly to grow less, and capitalism, which 
has already absorbed nearly half of the inhabitants of 
the world, largely within half a century, is in a position 
to absorb the other half much more rapidly. The demand 
for unskilled labor in industry may in a comparatively 
short time absorb all the millions that China and India 
can spare from agriculture, and the Asiatic standard of 
living may rise at least to that of the Slavic, Italian, 
Greek, and Portuguese laborers, who have so readily 
adopted the standards of the American working class. 
The laboring masses are not international in their attitude 
to-day, but they are bound to become so, as rapidly as 
they become industrial wage-earners. The standard of 



296 NATIONALISTIC SOCIALISM 

living determines wages only in those backward employ- 
ments that are not yet drawn into the circle of scientific 
management, where only efficiency wages can prevail. As 
one industry after another is put upon this modern basis 
in any one nation the other nations, no matter how back- 
ward, will have to follow, and American or European 
wages will thus gradually prevail, even in many industries 
of Asia. 

And finally the unskilled will always be more mobile 
than the skilled, more mobile than any class but the large 
capitalists. They will not be able to enter countries from 
which they are excluded by State Capitalism or State 
Socialism; they will not readily leave such countries, 
for to do even unskilled labor there becomes a privilege. 
But they are not rigidly held, as the small capitalists and 
skilled workers usually are, by privileges largely special- 
ized along national lines. The language is less important 
in their work, being powerless politically, the possession 
of citizenship and of political knowledge and influence is 
of less value, being less organized, the fact that one coun- 
try has stronger unions than another does not mean 
very much, and, since their children have little opportu- 
nity to rise anywhere, educational and other opportunities 
are of less moment. Indeed we may almost expect that 
the falling cost of trans-oceanic and transcontinental 
transportation will more than compensate for the legal 
restriction of immigration. The shifting of labor back 
and forth from one country to another — though forced to 
take new lines — may, then, continue to increase, and the 
laboring masses may progress towards internationalism 
even more rapidly than to-day. [For the attitude of the 
American Socialist Party towards the unskilled of the 
backward races see Appendix F.] 



CHAPTER XVI 

THE TRANSITION TO SOCIALISM 

Socialism will be reached, if it is reached at all, as 
every other form of society has been, by stages — usually 
one step at a time, occasionally a number of steps at one 
time, but certainly not at a single bound. To decide 
whether we are actually moving towards Socialism, how- 
ever, it is not sufficient to determine whether we are tak- 
ing one or several steps in the direction of Socialism. For 
powerful economic forces are also constantly at work 
carrying us in the opposite direction and I have shown 
that some of these anti-democratic forces are likely to 
continue for many years. We may be taking steps 
towards Socialism, while the very ground on which pres- 
ent society rests is moving still more rapidly in the other 
direction. 

The process by which Socialism, or any other new 
form of society, is attained may be divided into three 
stages. The final stage arrives, as a rule, only when new 
social classes begin to gain secure control of society and 
commence, by degrees, to transform it. Obviously, there 
must be some psychological preparation, however, or the 
class coming into power will have neither the will nor 
the intelligence to fill the function that awaits it. And 
there must also be a concrete preparation. That is, if the 
new classes are finally to become dominant, they must 
grow into dominance. Beginning as a small minority 
they must grow more and more powerful when com- 

297 



298 THE TRANSITION TO SOCIALISM 

pared with the ruling classes they are destined to replace. 
They may not be able to make any practical use of their 
growing strength as long as they remain overpowered. 
But nevertheless this strength is not merely psychic. It 
is concrete and real, for, when used to support the pro- 
gressive as against the reactionary elements of the ruling 
class, it gives the victory to the former. It is a real 
power, but it cannot be used against the ruling class as a 
whole, until it becomes the dominant power. The So- 
cialists at the present time, for example, can advance 
either progressive capitalism or State Socialism con- 
cretely, but they can only prepare advance of Socialism 
by increasing the numbers of its adherents and their 
capacity for effective action. 

The second stage, then, is one in which we are moving 
toward Socialism but have not yet installed any part of 
it. We can tell whether we have reached this stage by 
the following test. We must ask ourselves whether, dur- 
ing any other given period, the Socialist classes have in- 
creased their income and opportunities more rapidly than 
the non-Socialist classes. If so, we have begun to move 
toward Socialism. If not, we are still moving — as far 
as concrete conditions are concerned — away from Social- 
ism. But, even if we reach this negative conclusion, this 
does not necessarily mean that the prospects of Socialism 
are not improving. It means only that we have not yet 
reached the second stage, that the first stage has not yet 
been passed. We have been moving further and further 
away from Socialism in the United States, in a sense, 
ever since the large capitalists wrested the control of gov- 
ernment from the small capitalists — soon after the Civil 
War — though the prospects of Socialism have been con- 
stantly improving. The moneyed aristocracy has notori- 
ously been growing in numbers, wealth, and power, when 
compared with the farmers and small business men or 



THE TRANSITION TO SOCIALISM 299 

with the rest of the community. But now this relative 
increase of the rich has probably begun to slacken. And 
the day must very soon arrive when we will be moving 
away from "plutocracy" towards small capitalist democ- 
racy (which, under the conditions of to-day, means a 
partial collectivism). Similarly the increase of small 
capitalist incomes, of farm values, savings bank accounts, 
endowment insurance policies, etc., is no longer so dispro- 
portionately greater, when compared with the increase of 
salaries, fees, and wages of better paid employees, as it 
formerly was. While the small capitalists are still gain- 
ing on these newer classes, their gain is constantly grow- 
ing less. If this tendency continues, the small capitalists 
will cease to gain relatively and these newer classes will 
begin to draw steadily nearer to supreme political and 
economic power. We shall then be advancing from State 
Capitalism to State Socialism. 

But, when State Socialism is once achieved, this law 
of progress will alter fundamentally. The non-privileged 
workers, by the constant absorption of their upper layers 
in the ruling class will have no possibility of growing into 
a majority, but will be placed permanently in the min- 
ority. 

The transition from State Socialism to Socialism, how- 
ever, will be facilitated in two ways. The ruling classes 
under State Socialism will stand to lose much less by the 
change to Socialism than the present ruling classes would, 
if the change were made under present conditions, and 
the ruling classes will stand to lose much more from a 
continuation of the class struggle than they lose by it 
to-day. Besides, the increase of individual efficiency, by 
allowing the full development of all — at least as far as 
the means of society allow — instead of that of the ruling 
class alone, would approximately double the productivity 
of society. Against the change to Socialism, from the 



300 THE TRANSITION TO SOCIALISM 

ruling class standpoint, there will be only one serious ar- 
gument, namely, that with equal opportunity competition 
will be approximately doubled for the more desirable po- 
sitions in industry and society. Children will find their 
level according to their merit — without regard to parent- 
age, except as parents are able, outside of school hours, to 
pass on to their children a part of such intellectual or 
moral superiorities as they may possess. The incomes of 
the former ruling classes (those of State Socialism) may 
also automatically be lowered for a short time because of 
increased competition. But they will soon rise again, 
owing to the forces above mentioned, to a higher point 
than before. 

On the other hand, unless Socialist policies are intro- 
duced, the class struggle will become more burdensome 
year by year. For it will be progressively easier for dis- 
contented employees to inflict financial damage on the 
ruling classes. The increase of wages, shorter hours, etc., 
given to the laboring masses for the purpose of increasing 
their efficiency, will be used by them more and more fre- 
quently for the purpose of fighting their rulers. The 
greater intelligence of the workers, developed by State 
Socialism with the expectation that it will be used to 
increase the product rendered the ruling classes, will also 
be turned more and more effectively against those classes. 
Machinery will be more and more complicated, labor 
more and more interdependent, and industry will be cor- 
respondingly easier to obstruct. The ruling classes, then 
many millions strong, will be living closer to their in- 
comes than the present plutocracy and every voter will 
feel the losses of every large strike, since nearly all such 
strikes will be against governmental industries — there 
being comparatively few others in existence. 

The very basis of State Capitalism and State Socialism 
is the application of science to increase the efficiency of 



THE TRANSITION TO SOCIALISM 301 

labor, and this increased efficiency will immensely 
strengthen the laborers in their conflicts with the employ- 
ing government. For against the effort to increase effi- 
ciency and output, which is the object of the ruling class, 
they can always reply by "withdrawing efficiency from 
the work." This is one of the several policies now be- 
coming known as "sabotage," and the expression just 
quoted is a definition of "sabotage" by William E. Traut- 
man, one of the founders of the Industrial Workers of 
the World. But this term, though it seems likely to 
last, is only confusing. "Sabotage" is also used, and 
with accuracy, to mean any kind of interference with 
the regular production. (See Louis Levine, The Labor 
Movement in France.) It may thus mean the destruction 
of machinery or personal attacks on strike-breakers or 
employers. But such methods, though they will occur in 
the future as they have in the past, are the product, not of 
the laboring masses, but of decaying trades and crafts 
which hope to establish Socialism by insurrection and 
general strike. They presuppose the continued rule of 
the present plutocracy, perhaps even a more reactionary 
one, and do not dream of the improved conditions of 
State Socialism. These craftsmen may admit the possi- 
bility of somewhat better material conditions — but only 
of such as can be secured by the labor struggle — and in 
no other way. They expect, even in this event, more 
oppression and less liberty. Their natural recourse is to 
an increase of violence and often in that extreme form 
called criminal by the statute books. 

But many representatives of the laboring masses, in- 
cluding well-known I. W. W. members, either attach 
little importance to such extreme methods or positively 
oppose them. To withdraw "the efficiency from the 
work," that is, to do either slower or poorer work than 
one is capable of doing, is also a mere continuation and 



302 THE TRANSITION TO SOCIALISM 

systematization of a world-wide practice, which has long 
been a fixed policy of the unions of the aristocracy of 
labor. But its object in their hands was merely to enable 
the workers to take things easy, to increase the number 
employed, and so to strengthen the monopoly of skilled 
craftsmen. The laboring masses have now completely 
revolutionized the motive as well as the method. In order 
to influence employers the output can no longer be re- 
stricted on all occasions. The work must be good and 
fast when the employer does what labor wants, just as it 
must be poor and slow when he refuses to do what labor 
wants. The practice must be measured, intelligent, and 
with a conscious purpose. It is a pity, then, that there is 
for this practice not some middle expression between the 
old term, ca canny, which means unintermittent restric- 
tion of output, and the new term, sabotage, which often 
means almost any kind of attack on the employer or his 
business. 

But what I want to emphasize at this point is that, in 
proportion as the scientific methods of increasing effi- 
ciency are applied in industry, one of the laborers' best 
and most natural weapons is the scientific development 
of methods of interfering with efficiency, which methods, 
it seems, are likely to be lumped together with entirely 
different and often contradictory practices under the 
common name of "sabotage." 

Mr. and Mrs. Sydney Webb refer to "the 'sweating 
methods which American employers are now calling 
'scientific management' and the 'ca canny' of the work- 
men, developing into 'sabotage,' by which these are 
met." 1 Here the conservative labor union authorities 
recognize the inevitable coupling of the labor efficiency 
movement with this new form of resistance. They do 
not recognize the movement of scientific management 
as inevitable. But, when it sweeps all before it, as it 



THE TRANSITION TO SOCIALISM 3O3 

must, then the Webbs will become apologists for the new 
method of warfare of the laboring masses. (I must 
note in passing that the Webbs are completely mistaken 
in one matter. The new employers' movement has noth- 
ing to do with sweating in the ordinary sense. Scientific 
management aims to wring more money from labor, but 
only by improving health, skill, and intelligence.) 

Taylor, in his Scientific Management, speaks of the 
practice of "ca canny," from the older motives, as 
being well-nigh universal in this country. "Scientific 
soldiering is done by the men with the deliberate object of 
keeping their employers ignorant of how fast the work 
can be done. ... So universal is soldiering for this 
purpose that hardly a competent workman can be found 
in a large establishment . . . who does not devote a 
considerable part of his time to studying just how slow 
he can work and still convince his employer that he is 
going at a good pace." 2 

Taylor mentions as general also the other, and it seems 
to me predominant, motive of the skilled for curtailing 
the output, namely, to make employment for more men — 
by making the supply of labor less than the demand and 
so increasing wages. Among the unskilled, in view of the 
wide (often world wide) sources of labor supply, this 
last object at least, has been entirely impracticable. On 
the other hand, effective strikes of the unskilled are often 
exceptionally difficult and costly and this is undoubtedly 
an additional motive for the intermittent practice of "ca 
canny" or "striking on the job." 

It may safely be said that the tremendous opposition to 
what is called "sabotage," on the part of small capitalists 
and the aristocracy of labor alike, is really directed, not 
against the use of this typical method of "the aristocracy 
of labor," but against its use in a new and more effective 
manner — though far less continuous and less destruc- 



304 THE TRANSITION TO SOCIALISM 

tive than the old. For, as used by the skilled, the restric- 
tion of output raised prices and so in reality was aimed 
against industry and all society, while in its new inter- 
mittent form it can have little effect on prices and is ex- 
clusively aimed against employers — and their allies, the 
craft unions. 

The present outcry against "sabotage" pretends to be 
directed against destructive sabotage, crime, violence, etc. 
But all such methods are much nearer to the older unions, 
as just mentioned, than to the unions of the laboring 
masses — as labor union history amply demonstrates. 
Both groups are now moving away from such tactics, but 
the democracy of labor is undoubtedly moving more 
rapidly than the aristocracy. This outcry on the part of 
the latter really means that the laboring masses are recog- 
nized as daring for the first time to act independently of 
the upper classes of labor, and that the efficacy of the 
new fighting methods is appreciated — an efficacy due in 
large part precisely to the fact that they are extremely 
aggressive while far less destructive or damaging to con- 
sumers than either the "ca canny" system or the strike. 

These facts have been widely recognized even by con- 
servative authorities. Professor Louis Brentano, for ex- 
ample, says that this peaceful form of "sabotage," when 
separated from violence, is "a much more fearful weapon 
than the strike," especially in view of the increasing com- 
plexity of industry. And how much more effective will 
it be under the far more complex industry of State So- 
cialism ! Already, as Brentano points out, even the omis- 
sion of small duties by the workingmen may bring a 
whole establishment to a standstill, and this cannot 
be prevented. "Sabotage," as Brentano calls the new 
weapon, "can be also employed with the most perfect 
morality and legality and with the most extreme damage 
to property. It consists simply in the systematic neglect 



THE TRANSITION TO SOCIALISM 305 

of the interest of the employer concerned." Here is a 
definition far broader than Trautman's. In modern in- 
dustry untold damage may be inflicted on the employer 
(whether corporation or government) simply "by with- 
drawing good-will from the work." The modern indus- 
trial machine may be damaged by the very fact that the 
class struggle spirit survives strikes and continues while 
the men are at work. (Under State Socialism nearly all 
strikes will be a part of the class struggle. The aris- 
tocracy of labor will get its demands by political means — 
except when a new group is about to be admitted but is 
not yet admitted to the ruling class.) The most famous 
examples of this latter method of fighting are the so-called 
passive resistance strikes of railroad employees in Aus- 
tria and elsewhere, when they simply obeyed literally, for 
a time, the enormously complicated rules and regulations. 3 
Nor must it not be supposed that Professor Brentano 
really considers such methods as "fearful." They are 
fearful to employers, and may be met, according to Bren- 
tano, by sufficient concessions in improved wages, condi- 
tions, and social reforms — which he advocates on inde- 
pendent grounds. 

Equally important with this weapon is the intermittent 
mass strike. By having no agreements with employers 
or employing governments, any combination of the hosts 
of labor may strike at any time. This method, being more 
"fearful" to employers than independent strikes of lim- 
ited numbers at fixed times, is correspondingly more 
effective. Like the new military weapons, it causes less 
suffering than the old, but is more irresistible. Such 
strikes will be more unexpected, more extended, but less 
frequent than were the old. 

We might call the new strike policy one of provisional 
working class agreements for all unskilled laborers, as 
against trade or industrial agreements, for limited groups 



306 THE TRANSITION TO SOCIALISM 

of workers, for fixed periods. As long as conditions on 
the whole satisfy the laboring masses that they are pro- 
gressing as fast as practicable they may continue at work 
under the new form of agreement and do their best. 
Whenever, wherever, and in so far as. they are not so 
satisfied, they may either "strike on the job." or quit their 
work at the time when and the place where they can do 
the most damage to their opponents — which is the method 
pursued by all practical business men and statesmen. 

The minimum demand will always be for a wage in- 
crease at least sufficient to keep up with the increased cost 
of living. Y\ "hen the demand for labor is great, another 
wage policy, the maximum policy, will be followed, of de- 
manding an increase of wages sufficient to cut into profits. 
The latter policy, as I have shown, has little chance of 
success until we have State Socialism. But both mean 
at least an attempt at a class struggle and are valuable 
even to-day as preparing the laboring masses for successes 
under State Socialism. 

This emphasis on economic action is in accord with the 
statement of Marx that ''political power, properly so 
called, is merely the organized power of one class for 
oppressing another." This was meant to apply chiefly 
to capitalist society. Under State Socialism, or in pro- 
portion as this form of society is developed, political 
action also, now only of secondary importance to the 
laboring masses, will become more and more effective for 
their purposes. But the representatives of the organiza- 
tions controlled by the aristocracy of labor often, in order 
to get the political support of the unskilled, take the oppo- 
site view., claiming that even to-day political action is 
more important than economic action both for themselves 
and the laboring masses. 

The International Congress of London (in i8g6) de- 
clared by a large majority that ''the conquest of political 



THE TRANSITION TO SOCIALISM $Oj 

power is the means par excellence by which the workers 
can achieve their emancipation." It also excluded those 
Socialists who refused "to consider legislative and par- 
liamentary action as one of the means necessary to attain 
this end." (My italics.) It therefore recognized def- 
initely, as had all the best known Socialists (Marx, En- 
gels, Liebknecht, Bebel, Kautsky, etc.), that there were 
other means, besides the political, of fighting for Social- 
ism, thus practically conceding that the excluded mem- 
bers might be Socialists. But it went further than this. 
It admitted to the Congress "labor union organizations 
which, though they do not enter into militant politics, 
declare that they recognize the necessity of legislative and 
parliamentary action." Thus while many Socialist labor 
unionists were excluded many non-Socialist labor union- 
ists were admitted, in fact nearly all of the latter, since 
few would altogether oppose political action. This was, 
of course, a definite abdication of the International So- 
cialist Congress as a Socialist authority — since it might 
thenceforth be influenced or even controlled by non- 
Socialist Laborites. For the present, therefore, it is 
merely a Labor Congress, with Socialist traditions, and 
a powerful Socialist minority which expects to regain 
control — and will undoubtedly do so as soon as State 
Socialism is established. 

There can be no doubt that the non-political Socialism 
thus excluded from Socialist Congresses (while anti- 
Socialists are admitted) has been recognized as a genu- 
ine form of Socialism from the beginning of the move- 
ment, and it is still officially declared to be genuine So- 
cialism by the present French Party. Mehring refers to 
"non-political Socialism," though he considers it to be an 
early and transitional stage. 4 There can be no question 
that the International has deliberately excluded Socialists 
at the very time that it deliberately admitted non-Social- 



308 THE TRANSITION TO SOCIALISM 

ists whom it recognized to be non-Socialists. It is now 
an International Political Labor Movement, and nothing 
more nor less — though, as I have shown, this is doubtless 
only a temporary phase. 

There now comes, however, the most important of all 
Socialist reasons why at the present time labor union 
action of the laboring masses — on class lines — is more 
important than political action. In the Socialist and 
Labor Parties are united, until the coming of State So- 
cialism, both the aristocracy and the masses of labor, and 
the former, though a minority, is certain, during this 
period, to control these political organizations through 
its better political position. On the labor union field, 
on the contrary, the class struggle between employers and 
governments and the aristocracy of labor on the one 
hand, and the masses of labor on the other, is already 
beginning to outline itself. The laboring masses are 
doing all they can to make this class struggle a reality, 
and will come nearer and nearer to success as progressive 
capitalism develops and State Socialism draws near. 

Thus the class struggle — in its final form — will begin 
on the economic field, but as the movement of the aristoc- 
racy of labor begins to control governments and to use 
them against the laboring masses — as has already hap- 
pened sporadically in Australia — this struggle will begin 
to become political also. Even under State Socialism 
economic action will for some time remain the more im- 
portant. But, in proportion as society is actually modi- 
fied by State Socialism, political action will become the 
more effective. 

For State Socialism will soon establish a sort of social 
democracy within the ruling majority. When it first 
comes into power it will find the upper classes arranged 
in a hierarchy. The social pyramid will already have 
been considerably flattened out (to borrow a figure of 



THE TRANSITION TO SOCIALISM 309 

William Allen White) by State Capitalism. But it will 
still be a pyramid. It will not take many years of State 
Socialist government, however, practically to level this 
hierarchy, at least as far as the children of the new gener- 
ation are concerned, and thus to insure equality of eco- 
nomic opportunity within the ruling class. Incomes and 
influence will remain unequal within that class, but will 
vary chiefly according to merit, that is, there will be a 
strict contract between society and every individual of 
the ruling class, as well as equal mutual obligations. So- 
ciety moreover will use every effort to increase competi- 
tion for higher paid positions so as to be able to lower 
such salaries and also to divide the positions and their 
functions among as many capable persons as it can find 
and develop among the ruling classes. 

I repeat this basic principle of ruling class organization 
under State Socialism at this point because of its revolu- 
tionary effect on the struggle of the lower class to be ad- 
mitted into this society on equal terms. I have spoken 
of the policy by which the masses of wage-earners may 
be kept in a permanent minority. Now a minority is 
politically powerless, as long as the ruling majority is a 
hierarchy. Even if the rulers are divided only into two 
parts, the ruled will be forced always to ally itself with 
the lower or less privileged part. But as soon as the 
ruling classes are reduced to a common economic level 
and have only one privilege, a right to share on equal 
terms in the profits made from the labor of the minority or 
the ruled — or in proportion as this point is reached — the 
political situation is completely revolutionized. For, after 
State Socialism will have fully established itself, the divi- 
sions within the ruling class will no longer be upon class 
line — i. e., they will not be between different economic 
levels, since there will be only one level. The new con- 
flicts of interest will follow the lines of occupation or of 



310 THE TRANSITION TO SOCIALISM 

geographical sections, for example, the producers of food 
vs. those interested in cheap food, either as consumers or 
exploiters of consumers, iron and steel vs. textile centres, 
the raisers of cotton vs. raisers of grain, etc. It is true 
that these divisions will be far less profound than those 
horizontal class divisions that preceded them, and it is 
also true that all these groups will unite against any re- 
bellion on the part of the exploited minority. The min- 
ority, then, will not be able to take advantage of these 
divisions in order at once to emancipate themselves. But 
they will at last be able, by allying themselves, first with 
one faction of the majority, then with another, to secure 
ceaseless and numerous small advances in that direction. 

Thus, for the first time in history, the ballot will be 
used to secure an advance of the lower half of the popu- 
lation towards equal opportunity. And both the ballot 
and this use of it will be secure, for the various ruling 
class factions will each want to use the masses for their 
purposes, and the slight advance the latter make on each 
occasion will not be enough to unite their political masters 
against them. 

Only when State Socialism will have had its effect, 
however, in levelling the classes within the ruling major- 
ity, can political action result in bringing any relative 
advance whatever to the minority. In the meanwhile 
political action will remain extremely valuable to the 
laboring masses, it is true, but only for the purpose of 
hastening the development of State Socialism to the point 
just mentioned. The first political step towards Socialism 
can only be taken after State Socialism is in an advanced 
stage of development. Such steps may be made through 
labor union action as soon as State Socialism wins control 
of government and industry. 



CHAPTER XVII 

SOCIALISM 

What policies, then, are distinctively Socialist to-day? 
What are the policies in which the co-operation of pro- 
gressives and Laborites is not to be expected? For the 
most representative Socialists are agreed that there can 
be no Socialism and no Socialist movement unless there 
is a concrete issue between the laboring masses and the 
governing classes. Bebel said : "It is not a question 
whether we are achieving this or that, but that we put 
forward claims which no other party can put forward." 
What, now, are these claims ? Liebknecht wrote : "We 
shall almost never go right if we do what our enemies 
applaud." What is the policy that no ruling class will 
applaud, even if that ruling class should be the aristocracy 
of labor, a part of the working class itself? 

I have touched on this question repeatedly, but, up to 
this point, chiefly in a negative way. I have shown that 
no measure, no policy and no administration brings So- 
cialism concretely nearer unless it does more for the 
masses than it does for the classes, unless it makes the 
income or the opportunity of the rulers and the ruled 
more nearly equal. I have mentioned the fact that cer- 
tain social reforms, if pushed far enough, may bring 
benefits that amount to the same thing as making income 
more equal. And I have pointed out that this is accom- 
plished directly whenever wages are increased more rap- 
idly than the rise in the productivity of the industrial 

3" 



312 SOCIALISM 

system. This is the only test. But how is it to be ap- 
plied ? 

There has appeared recently in the American Party 
an interesting effort to find a distinctively Socialist policy 
which carries out this principle. Socialists of Brooklyn 
appointed a Committee on Public Action, the object of 
which was to find "a practical and continuous means of 
inter-election propaganda." 

They proposed a petition (later to become a public 
referendum) on "The Lower Cost of Living and Mini- 
mum Wage." The interesting thing about the proposed 
measure is that it ties together and fuses these two causes 
— as had not been done before. The purpose of the 
measure is to establish : 

(i) "The right of every adult to receive government 
employment, the applicant to have free choice among 
such employments as he or she by competitive test may 
best be fitted for. 

(2) "A minimum daily wage for all government em- 
ployees of $3 or more, as well as a maximum workday 
of eight hours or less, under a system elastic enough to 
decrease the hours of work and increase the pay when- 
ever found to be expedient. 

(3) "Cost price of all necessaries and comforts of 
life, grown, made or manufactured under community con- 
trol, such cost price to include labor, material, wear and 
tear, and wages of superintendence. No public work or 
government-made goods shall yield a private profit to 
anybody." 

The last-named principle, if accompanied by a fixed, 
minimum wage for all industries (public and private), 
would, in proportion as it was applied to one industry 
after another, lead society directly into Socialism — pro- 
vided it were carried far enough. The first increase of 
real wages for employees generally effected by thus low- 



SOCIALISM 313 

ering the cost of living — the legal minimum making it 
impossible for employers to make a corresponding re- 
duction in wages — might bring wages only to the effi- 
ciency point, and so do as much for employers or the em- 
ployer government as for wage-earners. Up to this point 
the policy is that of State Capitalism, or of State Social- 
ism. But the moment this point is passed — through a 
continued lowering of the cost of living in nationalized 
and municipalized industries — real wages will be in- 
creased at the expense of profits, and each step we take 
along this road will be a step on the road to Socialism. 

But the problem of the equalization of opportunity is 
by far the most important phase of the movement to- 
wards Socialism — especially during the State Socialist 
stage. For during this period any large relative increase 
of the wages of the laboring masses will have to be paid 
for by a corresponding reduction of higher wages and 
salaries — since other forms of ruling class income (rent, 
interest, and profits) will have become so much less im- 
portant that to reduce them would provide only a very 
modest amount. Now Socialism does not require that 
wages and salaries should be brought to a single level, nor 
does it contemplate any artificial movement in that direc- 
tion. Society cannot afford to offend its most valuable 
servants by arbitrary reductions or restrictions of salaries. 
But it can lower the higher salaries gradually and auto- 
matically by increasing the competition for higher posi- 
tions, and it can use the money so saved for improving 
the wages of the laboring mass or instituting social re- 
forms for their principal or exclusive benefit. So that 
equal educational opportunity, accompanied by a civil 
service that provides positions for a larger and larger 
proportion of citizens, is the very essence of real democ- 
racy — i. e., social or industrial democracy. 

There can be no question that the founders of the 



314 SOCIALISM 

United States thought they were establishing a social 
democracy (cheap land giving everybody an equal oppor- 
tunity) — as nearly every important declaration of Jeffer- 
son and Lincoln indicates. Emerson, among others, 
thought that equal opportunity had already been provided 
for by governmental action : 

"New England undertook, for aught I know, for the 
first time in history, the most radical of revolutions — 
this, namely, that the poor man, whom the law does not 
allow to take an ear of corn when starving, nor a pair of 
shoes for his freezing feet, is allowed to put his hand 
into the pockets of the rich and say, You shall educate 
me, not as you will, but as I will; not alone in the ele- 
ments, but by further provision, in the languages, in the 
sciences, in the useful arts, and in the elegant arts." * 

This idea of equal opportunity for the young was, in- 
deed, New England's, and by 1850 that of all America 
— except the slave-owners. And it is the very essence 
and perfection of democracy. But only the first step was 
ever taken; the increasing inequality of wealth and 
of occupational opportunity, together with the growing 
importance and expense of technical training and of 
general education, has made that step more and more 
insufficient, and is making the educational opportunity 
of the upper and middle, as compared with the lower 
classes, more and more unequal year by year. 

A large part of the world's Socialists are fully aware 
of this tendency of present society away from educa- 
tional democracy. We read, for example, in a leading 
editorial in the world's greatest newspaper, the Berlin 
Vorwaerts, the following: 

"The majority of the German teachers have long de- 
manded the unified school. This means that the people's 
school shall not be, as to-day, a proletarian and pauper 
school, but a stage in the education of all pupils. The 



SOCIALISM 315 

higher educational institutions are to be organically con- 
nected with this common school for all, so that everyone 
that is capable can pass through the higher schools, with- 
out regard to his birth, his social position, or the property 
of his parents." 

"The ruling reactionaries are only too well aware that 
giving the right of education to the capable children of 
the working classes means nothing less than a general 
breach in the economic and political privileges of our 
ruling classes." 

If this right of higher education is given to a sufficient 
number of the people's children and the large majority 
of occupations are under the civil service, then, indeed, 
not only the present ruling classes, but every ruling class 
and every privilege, would disappear within the present 
generation. (See Chapters V and XIV.) 

And with this "most radical of revolutions" in the dis- 
tribution of education would come an equally radical 
change in its nature and quality, and so in the whole of 
our culture. For the masses would become the masters 
of their children's education. State Socialism, on the con- 
trary, would "make the State the educator of the people," 
as Marx pointed out in 1875 ( m his letter on the Gotha 
program) . And he also noted that even the United States 
had already advanced beyond this point — through its local 
control of schools. The coming democratic revolution in 
the schools will be directed largely against that State 
Socialism which attempts to mould the children of the 
masses to suit the purpose of the governing class. The 
approaching revolution is already being outlined in Ger- 
many, as we may see in the official position taken by the 
German Party at Mannheim in 1906. 

The Mannheim program demands, "in the interest of 
children as well as for the sake of society, that all their 
spiritual and bodily capacities should be developed to the 



316 SOCIALISM 

highest possible degree . . . until they come into the 
community as fully developed individuals with a full con- 
sciousness of their responsibility and occupy those posi- 
tions which best correspond to their individuality." 

"Hitherto Public Education has been always and 
everywhere a class education. While the ruling classes 
of each period have been able to monopolize a com- 
paratively good education for themselves — not only a 
general education, but also the technical education neces- 
sary to production and to the state — they have always 
left the subjected classes either without any such educa- 
tion, or have allowed them only that modest measure of 
technical education which has been indispensable for the 
production of the period. . . . 

"But the public school is not only a means for capital- 
ist profits, it is also an instrument for class rule and for 
the furtherance of the political interests of capital. While 
a many-sided and well-endowed higher educational sys- 
tem makes it possible for the youth of the ruling classes 
to obtain a general education resting on a scientific basis, 
and thereby gives the ruling class superiority over the 
working class, the children of the working people are 
drilled in the public schools in an artificially fabricated, 
falsified view of nature, of human society, and of the 
development of civilization. . . . 

"The proletariat is the bearer of a coordinated view 
of life (Weltanschauung), which, though it is a logical 
development out of the highest scientific and artistic 
ideals of our time, is in sharp opposition to the bourgeois 
view of life, and so to the bourgeois art and science of 
to-day, which have class character throughout. In view, 
then, of its historical mission, the proletariat cannot sim- 
ply take over the bourgeois culture, it must rather re-value 
it all according to its own view of life. It is from such 
causes that even the best intended and most worthy of 
the efforts of bourgeois circles for the raising of the 
scientific and artistic level of popular education have 



SOCIALISM 317' 

relatively small value. The social democracy can there- 
fore take no part in such efforts." 

The Socialists, as Riihle says, demand "equal educa- 
tional opportunity" for all and regard anything else as 
class education. But this revolutionary reform will never 
be granted by any other than a socially and industrially 
democratic society. This fact was the very inspiration 
of the great educators, Rousseau, Pestalozzi, and Fichte. 
They insisted that education was the common property 
of society, precisely because they knew that the practical 
application of this principle would bring a complete 
democracy. Education was above all a means to democ- 
racy. On the other hand, "the class school is the spiritual 
form corresponding to the economic and social class 
structure (of present society). It (present society) can- 
not give the former up without destroying the latter." 2 

The advent of the laboring masses J;o power will mean 
a free and equal public education for all children, equal 
educational and occupational opportunity for youth, and 
far less unequal incomes for adults. Class inequality of 
income will be entirely destroyed. Individual inequality 
of income will remain, but only in proportion to service 
performed — and this inequality even will constantly grow 
less. 

State Socialism may begin its transition to Socialism 
in a third way — or, rather, there are three ways which 
may be followed at the same time. Instead of an increase 
of wages more than proportionate to the growing social 
product, or a more equal distribution of opportunities, 
there may be a corresponding measure of labor reforms. 

I have pointed out that social reforms, as now pro- 
posed, without exception promise sometimes directly and 
immediately, at other times indirectly and ultimately, to 
increase the proportion of society's income and opportu- 



3l8 SOCIALISM 

nity that goes to the ruling class. But most of these re- 
forms may be developed to a point where they will have 
the opposite effect. If one or two reforms only are so 
developed, while the rest are used as before, to improve 
the position of the governing class, the net result will be 
that society will continue in the same anti-democratic 
direction as previously. But if enough reforms are 
pushed to this point, or if one or more important reforms 
are developed far enough, the total effect on labor may be 
the same as an increase of wages more than proportionate 
to the increase of the industrial product. 

I may illustrate the importance of the rate of reform 
as follows. Suppose that during a given period there 
were two important groups of labor reforms. Legisla- 
tion for children, for example, might bring a benefit to 
labor valued at $100,000,000 a year and a benefit to cap- 
ital of $200,000,000 a year. On the other hand the bene- 
fits paid in various forms of workingmen's insurance 
might be placed so high that the gain of labor would be 
worth $400,000,000 a year, while the savings in increased 
efficiency to the employing class, or class-controlled gov- 
ernment, might amount only to some $200,000,000. 
Thus labor would lose $100,000,000 relatively by the first 
reform and gain $200,000,000 relatively by the second. 
The net relative gain of labor, $100,000,000 a year, 
would evidently advance society towards Socialism at the 
same rate as a corresponding increase of real wages, a 
corresponding reduction of hours, or a corresponding 
increase of labor's relative opportunity. 

It is a new thing in modern history radically to im- 
prove the position of the lower classes — whether small 
capitalists, skilled workers, or unskilled workers — 
through institutions created by legislation. For this rea- 
son none of these classes have yet had time to learn to 
discriminate quantitatively between reforms — i. e., they 



SOCIALISM 319 

have not even begun to measure their value, to say noth- 
ing of employing businesslike or scientific methods of 
measurement. Reforms are discussed as being good or 
bad, without regard to just how good or how bad they 
may be — in proportion as they are more or less developed. 
Yet nearly every reform now under discussion is at once 
either State Capitalistic, State Socialistic, or Socialistic, 
according to the degree to which it goes. For example, 
I have just shown that to send a few of the children of 
the masses through the higher schools at public expense 
merely strengthens the present system; to send a moder- 
ately large number would mean that the lower middle 
classes were being more than proportionately favored, 
that is, elevated; if we made the number still larger we 
should reach the aristocracy of labor, while only as we 
gave practically all children an equal chance for promo- 
tion would we reach the laboring masses. This is wholly 
a question of degree, of the number of children provided 
for in these schools by the state; in its external charac- 
ter the reform is the same throughout. And this will be 
equally true of nearly every social reform. 

At the bottom Socialism calls for the abolition of 
hereditary privilege. At the bottom, then, it is identical 
with democracy, especially as it has been understood in 
America. In this country, under Jefferson and Lincoln, 
and during the whole pioneer period, we all believed in 
equal opportunity — at least for the young. The rich 
were tolerated only because they were so few, and 
because of the curious tradition that inherited wealth 
was nearly always squandered in the first generation — 
"three generations from shirt-sleeves to shirt-sleeves. " 
The empire of free or cheap lands made it possible to 
hold the view that already we had practically abolished 
hereditary privilege — although we had not even con- 
fronted, to say nothing of solving, a single one of the 



320 SOCIALISM 

social problems of settled countries and of mature socie- 
ties. But, if American democracy has been neither radi- 
cal nor profound, it has believed in the fundamental 
demand of Socialism — that there shall be no hereditary 
privilege. 

Now all inheritance may be abolished and hereditary 
privilege may remain; for parents may use capital ac- 
cumulated in their lifetime to give their children ad- 
vantages over other children. Private capital may even 
be abolished (or reduced to a minimum) and heredi- 
tary privilege may remain; for better-paid parents may 
use their incomes to give their children advantages over 
other children. Indeed, this is the point to which State 
Socialism brings us, and this is why it is State Socialism 
and not Socialism. The ruling-classes of that, as of previ- 
ous, societies will use their control of the State to protect 
their privileges. And their chief privilege is not that they 
will receive higher incomes, for these they may wholly 
or largely earn, but that they will use their incomes to 
give their children advantages over other children. And 
so it will happen that these children will, in turn, receive 
by far the larger part of the higher incomes — a larger 
part than their merit would justify. The capacities they 
have acquired may deserve a high reward. But they 
had no right to the expensive training needed to acquire 
these capacities until an equal opportunity had been given 
to all children to compete. Free competition between in- 
dividuals, like equal opportunity, and the abolition of 
hereditary privilege are basic to Socialism, as they were 
to the early democrats — only Socialism now offers the 
only way to put these principles into effect, and the non- 
Socialist "democrats" who continue to use such phrases 
and yet favor class rule, either by small capitalists or by 
some other fixed majority, can no longer be regarded as 
democrats. 



SOCIALISM . 321 

Socialism does not mean that there will be no social 
groups — or classes, if we call all such groups by that 
name; it does mean the abolition of all group or class 
rule. Class rule implies that more or less fixed classes 
exist one above the other and classes of this fixed charac- 
ter can, must, and will be abolished. The social groups 
that remain will not be superimposed one above the other. 
There will be no class rule. 

Roosevelt said in his Santiago speech : 3 

"We are not Socialists, for we do not believe in class 
consciousness. . . . But we do believe that the only way 
to prevent the growth of a party founded on class con- 
sciousness is to secure the triumph in the community of a 
party founded on the ideal of social consciousness." 

The Socialists could equally well say, "We are Social- 
ists, for we do not believe in class-consciousness." When 
Socialists say they believe in class-consciousness, they 
mean: "We believe that the governed should be con- 
scious of the fact that they are governed by class-con- 
scious rulers, who rule in their own interests and not in 
the interests of society." It is this class-conscious, class- 
ruled society that Socialists aim to abolish. 

The following three propositions may, perhaps, serve 
to sum up, as well as a few words can, the conclusions of 
this book: 

A certain measure of progress is to be expected 
through the self-interest of the governing classes. This 
is the national, or industrial, efficiency movement. 

Far greater progress is to be expected from the suc- 
cessive rise into power and prosperity of new elements 
of the middle-class — and of the upper layers of the wage- 
earners. This is the progressive and the Laborite move- 
ment. 

By far the greatest progress is to be expected as a di- 



322 SOCIALISM 

rect or indirect result of the revolt of the lower classes. 
For this is the only force that can be relied upon to put 
an end to class government and class exploitation of in- 
dustry and to establish that social democracy which is the 
real or professed aim of every progressive movement. 






APPENDIX 
A— WAS KARL MARX A STATE SOCIALIST? 

Did Karl Marx believe that every strike, whether of the 
aristocracy of labor or of the laboring masses, whether 
charged up to employers or to workingmen-consumers, was 
a part of "the class-struggle" against the ruling-class? If 
he did believe this, his authority can be quoted to support 
the proposition, on which the International Socialist Con- 
gresses are now based (see Chapter XVI), that Socialist 
Parties should regard themselves merely as a part, and, if in 
a minority, a subordinate part, of the "Labor" Movement. 
Moreover, if this is the position of Marx, then doubtless 
it has been the position of the present International Socialist 
Movement from the first, since it has been thoroughly 
Marxian ever since its organization in 1889. 

This problem will probably never be definitely answered. 
Texts are quoted pro and con, and only in one interview 
does Marx seem definitely to take the ground that the strug- 
gle of the conservative British trade unions (the aristocracy 
of labor) was part of "the class-struggle," But Kautsky 
and the International do, undoubtedly, take the position to- 
day that these unions are engaged in the class-struggle the 
moment they enter into politics, while the majority of 
Marxists have, beyond question, fallen into the habit of con- 
sidering practically all strikes in this way. Moreover, there 
is no question that Marx endorsed the fallacy of the solidar- 
ity of labor, so that from the Marxian standpoint any 
un-Socialistic action of the aristocracy of labor can logi- 
cally be regarded only as ignorant, stupid, and temporary — 

323 



324 APPENDIX 

an anachronism, a survival, a fact not to be explained even 
by the economic interpretation, but to be explained away. 

Marx, however, was a Socialist. And as a Socialist he 
refused the title of Socialism to the Laborite program, i. e., 
to State Socialism. He did not allow his theories to inter- 
fere with his clear vision of the concrete steps to Socialism. 
In his Gotha letter he accused the newly formed German 
Socialist Party of treating the State "as an independent en- 
tity that possesses its own spiritual, moral, and free princi- 
ples," whereas every State, he pointed out, was merely the 
product of the society on which it was based. And on this 
ground Marx assaulted a large part of the program of the 
new party, pointing out that the State could only pass such 
reforms as were to the interest of the ruling-class that 
controlled it — thus classing the whole State Socialist policy 
as non-Socialistic. 

It is true that Marx provided a program in the Com- 
munist Manifesto that might seem to be State Socialistic. 
But it must be remembered that he explained later that one 
of its chief elements, "the application of all rents of land 
to public purposes," was in itself merely "a Socialistically 
fringed attempt to save the rule of capitalism and to estab- 
lish it, in fact, on a still larger foundation than at present" — 
and this explanation would apply equally to its other ele- 
ments (see Marx's letter to Sorge — written in 1881). 

And in the Communist Manifesto itself Marx clearly 
stated that the basis of his program was the "political su- 
premacy" of labor — the organization of the proletariat "as 
the ruling-class." Until this happens the whole collectivist 
program, according to Marx, must remain a program of 
capitalistic State Socialism (or State Capitalism). 

Marx, however, did not realize the point to which capi- 
talistic collectivism would go. He did not realize that prac- 
tically all his program would be carried out by State Capi- 
talism itself. He foresaw State Capitalism and its func- 
tions, but he did not allow it the scope or time necessary 
to fulfill these functions. So he said, in the Communist 
Manifesto, that it would be the proletariat that would "cen- 



WAS KARL MARX A STATE SOCIALIST? 32g 

tralize all instruments of production in the hands of the 
State." In other words, he regarded State Capitalism 
merely as a program, or a tendency, which would never 
become a fact. For, almost as soon as this transformation 
began, labor would control the government. 

But the transformation of society into State Capitalism 
has already begun — sometimes in places where Socialism is 
as yet insignificant. This gives the Laborites an oppor- 
tunity to claim that, since "the centralization of the instru- 
ments of production in the hands of the State" has begun, 
Marxism teaches that it must be labor that is bringing this 
about, in other words that labor is already winning the 
political supremacy — if not through Socialist Parties, then 
through Labor Parties, or even through Labor Unions 
without any political organization. 

Secondly, as he did not picture a victorious State Capi- 
talism, Marx had no conception whatever of the follow- 
ing society — State Socialism — a society based upon a priv- 
ileged majority, in which capitalists play only a subordinate 
part. It is therefore possible to be a perfectly good Marx- 
ist and at the same time to be a State Socialist. Indeed, if 
we consider the unclear position as to State Capitalism just 
described, and add to this the doctrine of the solidarity of 
labor, it is difficult to see how an orthodox Marxist to-day 
can be other than a State Socialist. Marx was not a State 
Socialist. But his doctrine of the solidarity of labor made 
in that direction, even when he was alive, for the aristoc- 
racy of labor have always held either that they were al- 
ready part of the ruling class or expected that they would 
be — individually or as a class. While Marx was alive his 
criticism of State Capitalism prevented his doctrine of the 
labor solidarity from thus driving the Socialists into the 
hands of the aristocracy of labor. But now that State Capi- 
talism is actually being established by the capitalists — 
against Marx's expectations — this criticism has become ob- 
solete, and the doctrine of the solidarity of labor rules su- 
preme without any counter force to check it. 

Marx was not a State Socialist. But the annihilation of 



3^6 APPENDIX 

one of his radical doctrines by events, and the survival of 
another conservative doctrine, which has not yet been 
wholly disproved by history, have brought us to the result 
to-day that every orthodox Marxist must be a Laborite, 
which, under present conditions, means a State Socialist.* 
And, indeed, the fact that Marx himself was a Laborite 
could lead to no other conclusion. 

But a movement that rests upon all labor and upon labor 
exclusively is merely a labor movement. Liebknecht under- 
stood this when he wrote : "We ought not to ask, 'Are 
you a wage-earner?' but 'Are you a Socialist?'" "By 
working-people," he said, "Socialists do not understand 
merely the manual workers," but "every one who does not 
live on the labor of another," i. e., all those who live "ex- 
clusively or principally by their own labor." "Besides, the 
wage-earners" he would include classes which "tend more 
and more to drop to the level of the proletariat" — thus mak- 
ing the economic level and not occupation the test. 

* By orthodox Marxists I mean those who get their basic ideas 
and principles from Marx's writings — for there are probably mil- 
lions of such persons. I do not refer to those personal followers 
who get their chief inspiration from Marx's life, character, or in- 
tellect. Marx's teachings were based on the economic conditions, 
the science, and the philosophy of the time when he wrote (1844- 
1881). Whatever was inspiring in his life is as inspiring as 
ever to-day. And the services he and his writings have rendered 
in the past are also permanent and can never be effaced. History 
can show no greater political and economic philosopher, and prob- 
ably Marx's equal as revolutionist, democrat, and propagandist 
never lived. But the fact that he was a supreme genius, that his 
character was of the highest and purest, that he did as much as 
any man could do, as man ever did, to turn the whole course of 
history, does not in the least justify the orthodox Marxists who at- 
tempt to apply the ideas of 1850 or 1875 to the conditions of 1914 — 
or, what is even worse, to the conditions of the future. 

Probably if Marx were alive to-day — with his genius and char- 
acter — he would make as valuable a leader of democracy and revo- 
lution as ever. He would no doubt reverse many of his old teach- 
ings as aiding only Laborism and State Socialism. But this is all 
speculation — no matter how certain we may feel about it. The 
orthodox Marxist has no choice. Marx is dead, and the only 
voice he has are his writings. The spirit of these is doubtless 
revolutionary and democratic — but the letter, under present con- 
ditions, is anti-revolutionary and anti-democratic. 



WAS KARL MARX A STATE SOCIALIST? $2? 

It is difficult to see why (except for political purposes) 
the term "working-class," which in ordinary use and even 
in Socialist use is synonymous with wage-earners, should 
be retained as describing all the producing non-exploiting 
and exploited class upon which Socialism builds. Lieb- 
knecht at least is clear. Others than wage-earners are to be 
included as part of this proletariat. But, according to the 
very same facts to which he points and the reasoning that 
he uses, a part of the wage-earners also must be excluded — 
namely, those wage-earners who are not on the general 
proletarian "level" but above it and who live in large part 
(though scarcely ever principally) upon the labor of 
others. 

We cannot suppose for one moment, moreover, that Marx 
either overlooked these facts or underrated the conservatism 
of the aristocracy of labor. Not only do many passages show 
that he fully understood this, but we have his motive for, 
nevertheless, subordinating this knowledge and including 
the aristocracy as destined to become part of the working- 
class and of the future Socialist movement. In his letter to 
the Communists in 185 1 he wrote: 

"The forces opposed to you have all the advantage of 
organization, discipline, and habitual authority; unless you 
bring strong odds against them you are defeated and 
ruined." 

That is Marx, and the Socialists of his time could not 
see any possibility of reaching Socialism except through 
a large majority. (Later it was calculated by Kautsky that a 
Socialist victory would require 75%, and by Liebknecht that 
it would require that 95% of the nation be won for Social- 
ism.) It either did not occur to Marx that the cheapest plan 
for the ruling-class to delay Socialism, and one that was 
certain to be adopted, would be for it to admit a part of 
the working-class to government, or, seeing no chance for 
Socialistic progress through a class (the laboring masses), 
that could never hope to become a majority, Marx did not 
dare to face that problem at all. Yet we now see that it is 
the central and basic problem of Socialism. 



3^8 APPENDIX 

The modern Socialists do not deny the immense historic 
importance of Marx, they deny merely the present-day im- 
portance of his doctrines. We accuse Marx of having died 
in 1883, of having been born in 1818, and of having done 
his public work and writing from 1842 to 1882. And, in 
view of the rapid economic and political evolution of the 
last three or four decades, we are willing to rest our case 
with this indictment. 



B— THE GERMAN SOCIAL-DEMOCRACY AS A "LABOR" 

PARTY 

To understand the real principles of the German Socialist 
Party it is only necessary to understand its present acting 
policy. And for this purpose it is neither necessary to go 
deeply into Marxian theories nor to review German history 
before 1870. For the present acting program of the Party 
was made at Erfurt in 1891, and the Party itself was 
founded only in 1875 — with the significant opposition of its 
leading theorist, Marx. 

Of earlier German history we must note only that Prus- 
sia had long been a semi-absolute military bureaucracy, con- 
trolled by the landlord nobility, and that nearly all the Ger- 
man Governments had shown more or less resemblance to 
this type — the economic conditions being similar. One fea- 
ture of such governments is despotic class-rule, in the nar- 
rowest sense of the term. But another feature, since the 
dawn of modern capitalism in the 18th century, has been 
the so-called policy of "benevolent" despotism, well exempli- 
fied by Frederick the Great. This paternalism gives scien- 
tific consideration to those aspects of the welfare of the 
people in which it is financially interested. Frederick was 
chiefly interested in having efficient soldiers and so looked 
after the soldiers' health. His successors, Bismarck and 
William II, are equally interested in having efficient work- 
ingmen, and so look after the workingmen's health. 

This was the chief motive of Bismarck in favoring gov- 
ernmental insurance for workingmen. The Socialists have 



GERMAN SOCIAL-DEMOCRACY AS A "LABOR" PARTY 329 

also claimed the credit for this legislation, pointing to argu- 
ments of Bismarck at the time, when he spoke of the 
"menace" of the Socialist movement. Bebel, for example, 
refers to this in his "Life." 1 

"Sonnemann reported [to a Socialist convention] on the 
foundation of the Old Age Pensions Funds under State 
control. But his proposals were rejected, especially on the 
grounds that State control would tend to make the workers 
unconsciously conservative with regard to the existing 
State, which was quite unworthy of confidence ; a conviction 
shared by Bismarck, who declared later that small pensions 
for the worker were the best means of reconciling him with 
the existing order of the State — a conviction underlying his 
invalidity and old age insurance laws. . . ." 

But this talk of a "menace" by Bismarck was only a 
statesman's bogey which he used for several of his pur- 
poses. The German movement at the time was insignificant 
and German conditions were utterly unlike what they had 
been in Berlin in the menacing insurrection of 1848, or in 
the Paris commune of 187 1, when there had also been a 
real menace. But Bismarck had granted universal and equal 
suffrage for the Reichstag, and, if the wage-earners' party 
was insignificant, the small capitalist (Progressive), large 
capitalist (Liberal), and Catholic (Centre) parties were 
not. Moreover, certain individual moss-bound agrarian 
reactionaries, influential with the nobility and the court, 
had to be forced to reasonable concessions to capitalism in 
order to strengthen the government and their own class. 
Bismarck used the Socialist bogey as an excuse to frighten 
the timid Progressives away from any Socialist alliance by 
threats of terrible governmental reprisals. The Liberals and 
Conservatives he frightened by showing what fearful losses 
to property might result from any real concessions to the 
working-class, and he recommended these pseudo-conces- 
sions instead. Later statesmen and Liberal leaders have 
even tried to flatter the Socialists into conservatism — by 
claiming that these insurance laws were real "concessions" 
and that still more such concessions could be obtained by a 



'33° APPENDIX 

still more conciliatory Socialist policy. And, finally, Social- 
ist politicians, seeking for the easiest way to get votes, have 
themselves encouraged this myth of Bismarck's "concessions 
to the menace of Socialism" for such a long time that they 
not only are beginning to believe it themselves but have 
converted the Socialist Party as a whole to this view — in- 
cluding some of its most honest and thoughtful members.. 

Yet these laws were obviously nothing more than an ap- 
plication of the old-time Prussian paternalism. It is true 
that they aimed to promote "loyalty" as well as efficiency. 
This had always been a motive in benevolent despotism, and 
was bound to continue a desire of the rulers, even if it has 
less promise of being realized under modern conditions. 
But to try to allay discontent is one thing, and to give way 
before a menace is another. Discontent is unprofitable even 
when it does not rise to the height of a menace. And it 
need not be denied that discontent would probably have 
been much worse than it is had Bismarck not enacted these 
laws. 

The 1 8th century policy of benevolent despotism sur- 
vived in Germany because of the weakness of modern capi- 
talism before 1870, and the strength of militarism after- 
wards. The working-class, before 1870, was not only small 
but conservative — and in some slight measure anarchistic, 
for it consisted largely of artizans, who either expected to 
have a small business of their own, or were desperate revo- 
lutionists or Utopian dreamers, because their work was 
being made obsolete by modern industry. Moreover, the 
modern workingmen — machine operators, factory and rail- 
road employees — in so far as they did exist, were chiefly 
the children of peasants, with the latter's subservience to 
monarchy, aristocracy, militarism, church, bureaucracy, and 
professors. 

The middle classes were largely either mere traders or 
dependents on government, militarism, nobility and courts. 
Even the large capitalists were largely at the mercy of 
monarchs and the higher nobility — except when in close 
alliance with them. 



GERMAN SOCIAL-DEMOCRACY AS A "LABOR PARTY 33 1 

Bismarck was quite safe in granting universal suffrage 
under these conditions — and he needed it in order to use 
the peasants and middle classes against the quarreling priv- 
ileged classes of the various nations that composed the Em- 
pire. The peasants could be relied upon as being reasonably 
or moderately reactionary — i. e., where they were not wholly 
under the control of the local aristocracy. The middle class 
could equally be relied upon as very moderately progressive. 
Moreover, both of these classes would be enthusiastic about 
their new found political "power," in spite of the fact that 
it was effectively and completely checked by the monarch's 
control of the upper house, of the army, and of the bureau- 
cracy (since there is no responsibility of ministers to the 
Reichstag) — to say nothing of his personal veto power. 
And, indeed, the expectations of Bismarck have been more 
than justified, for political enthusiasm over this "parliamen- 
tary bauble" has lately spread even to the working-class and 
the Socialists. Parliaments are not baubles — when they are 
parliaments. But the German Reichstag more nearly re- 
sembles a Russian Duma in its actual power than it does a 
Parliament — a condition, however, which will certainly be 
corrected in the near future, if a capitalistic revolution is 
required for the purpose, as Germany's phenomenal eco- 
nomic advance already demands a modern capitalistic gov- 
ernment. 

But during the two decades in which the German Socialist 
movement was crystallizing (1871-1891) it was by no 
means clear that the next stage in human progress was 
a small capitalist democracy (or even that landlordism must, 
still earlier, give way to plutocracy) or that this stage 
must intervene between the society of that time and any 
society that could have a remote resemblance to Socialism. 
Viewing the present change in Australia, America and else- 
where, a growing minority of the German Party, the revi- 
sionists (Laborites), now see this. But, passing into an 
extreme reaction against the former Party policy, they now 
conclude that the Party should practically give its entire 
attention, for an indefinite period, to accelerating the com- 



33 2 APPENDIX 

ing of this democratic, progressive, and capitalistic state. 
They are rapidly winning the Party over to their point of 
view. They have had to content themselves with revolu- 
tionizing the tactics of the movement, however, without 
being able to revolutionize its thought. They have thus 
steadily widened the gulf between theory and practice ever 
since the Erfurt Congress in 1891. Having no new gen- 
eral principles they care publicly to propose (Laborism is 
more popular in the disguise of Socialism), and no mes- 
sage beyond the need of establishing a progressive small 
capitalist democracy, they have merely introduced a new 
element of confusion into Socialist political thought — 
which still remains, in a large measure, that of the decades 
1871-1891. Let me show how this has come about. 

The Gotha Congress of 1875, at which the present Party 
was formed, voted by a majority of 10 to 1 the following 
formula, which remained in the program until 1891 : "The 
emancipation of labor must be the work of the laboring 
class, opposed to which all other classes form a single reac- 
tionary mass." This implied that no very great progress, 
certainly no revolutionary change, was to be expected short 
of Socialism. It became the chief subject of discussion in 
the party between the Gotha and the Erfurt Congresses, and 
was finally repealed at the later gathering. But this was 
done chiefly in recognition of the fact that the Socialists 
must take the side of the capitalists in the very important 
struggle between these and the landlords. It is only lately 
that any great importance has been attached by the majority 
of Socialists to the struggle between large and small capi- 
talists, and even now there is no general recognition that a 
profound revolution is impending entirely within the limits 
of capitalism. 

Two widely different causes blinded the German Socialists 
of 1871-1891 both to the possibility of overthrowing both 
the landlords and the large capitalists and to the vast ad- 
vantages of establishing a small capitalist democracy. 
These two causes were both well expressed by Engels in a 
letter to Bebel written in 1875 in which he attacked the 



333 

theory that the capitalists formed "a single reactionary 
mass." 2 

"This principle,'' Engels wrote, "is true only in excep- 
tional cases ; for example, in a revolution of the proletariat, 
as in the Commune (the Paris Commune of 1871), or in a 
land where not only has the bourgeoisie shaped state and 
society according to its model, but where the democratic 
small capitalists also have come along afterwards and car- 
ried out this policy to its last consequences." 

The Commune and revolutions of 1848 had shown that 
when the workers made a general attack on capital the two 
classes of capitalists would unite against them — and both 
Socialism and the workers' interests, the Germans thought, 
require such a general attack on capital. This conclusion 
is sound. But the attack may be successfully made, as 
Engels says, only after that political and social revolution 
by which a small capitalist, democratic, and semi-collectivist 
state and society replace the old. 

The German conditions of 1875, 1891 — and of 1914 — 
were, and are, far behind those of the small capitalist de- 
mocracy which was already taking shape in Switzerland in 
1875, and has since reached its highest point in Australia, 
New Zealand and some of our western States. To the 
German workers even political democracy is so infinitely 
more desirable than present German conditions, and so in- 
finitely difficult of attainment, that it seems almost like an 
ultimate goal, which would justify the most revolutionary 
efforts. Hence they can even now scarcely imagine that 
their enemies, the small employers, farmers, and taxpayers, 
will inevitably unite with them against their other enemies, 
the large capitalists and landlords, for the purpose of es- 
tablishing the government they so ardently desire. 

And even the revolution that follows this small capitalist 
one — as we begin to see in democratic countries — may re- 
sult, not in the abolition of class-rule, but only in the aboli- 
tion of small capitalism and in the inauguration of govern- 
ment by a bureaucratic caste. The probability of a first 
intervening stage of State Capitalism, though recognized 



334 APPENDIX 

by leading Socialist thinkers, was ignored by the Socialist 
movement as a whole (as I have shown in reference 
to the Erfurt program of 1891). The probability that still 
another stage will intervene between us and Socialism, 
namely, State Socialism, was ignored even by the leading 
Socialist thinkers. Marx and Engels, it is true, criticised 
severely and accurately some of the leading features of 
State Socialism. But they not only confused it with State 
Capitalism but failed absolutely to indicate its more or less 
separate economic foundation — the aristocracy of manual 
and mental labor and of governmental employees. 

This is why it was possible for La Salle — who, in contrast 
with Marx and Engels, completely confused Socialism and 
State Socialism — to be a demi-God of a large faction of 
the movement throughout its earlier stages, and to maintain 
his prestige as a Socialist almost undiminished until to-day. 
It was inevitable that some popular leader should play off 
the "paternalistic" tradition of Prussia against those ex- 
ceptional and extreme individualists among the capitalists — 
very noisy but without real influence — who argued that 
capitalism itself, without any "benevolent" legislation, 
would bring the greatest good to the greatest number. But 
it showed the extremely backward condition of Germany 
that such a man as La Salle — because, along with his State 
Socialism, he shared certain Socialist principles and ideals 
— should actually have been the first great leader of the 
German Socialists. 

Bernstein admits that La Salle used "the language of 
Csesarism," and quotes a passage to prove it. 3 Bernstein 
concludes, moreover, that La Salle's policy, "if literally car- 
ried out, meant misleading the masses." If we recall the 
despotic form La Salle gave to the German Workingmen's 
Association, his despotic control over it, his conferences 
with Bismarck, and other indications of a more or less 
friendly relationship, we can see that Bernstein had some 
justification for this remark. 

Bebel in his Life attacks "the cult of La Salle," and 
refers to "the weakness of La Salle's proposals," while the 



GERMAN SOCIAL-DEMOCRACY AS A "LABOR" PARTY 335 

letters of Marx, though at first friendly, show later an ex- 
treme suspicion. 

While Marx, Engels and Bebel attacked every State, La 
Salle idealized the State more perhaps than any other State 
Socialist that ever lived. To La Salle the State is "the 
unity of individuals in an ethical whole," the function of 
which is "to fashion human destiny." The State is to be- 
come "the institution in which the whole virtue of mankind 
shall realize itself." It is "the immemorial vestal fire of all 
civilization." It "exists for," "has always served," and 
"must serve . . . human progress." 4 The effect of this 
sort of reasoning is always to attach extreme importance 
to everything the government is doing, especially when it is 
progressive, and to give very little importance to popular 
oppositional movements which have as yet no real power 
to mould the State to their own purposes, but can only 
aid the progressive wing of the ruling-class. 

Most of the conditions I have mentioned up to the present 
point have been purely German. None of them apply to the 
more or less democratic nations of to-day. It is these 
purely German conditions, as leading German Socialists ad- 
mit, that have chiefly shaped German Socialist policy. Yet 
the German Socialists, being the first and most powerful of 
Socialist parties, have dominated international Socialist Con- 
gresses and Socialist political philosophy — with conclusions 
based almost wholly on these extremely backward political 
conditions of their own country. The Socialism that was 
sound and inevitable in Germany becomes absurd when ap- 
plied to the United States. 

Liebknecht was one of those who recognized that the 
Germans should be in the position of learners rather than 
teachers. 5 "The German proletariat had the advantage of 
being able to draw practical lessons from the labor move- 
ment in countries which were [and are] ahead of Germany 
in political and economic development." This statement is 
scarcely less true to-day than when it was published (1900). 

Liebknecht points out to the German working class that, 
"besides performing its own class mission, it must do what 



336 APPENDIX 

in normally developed lands was long ago done by the bour- 
geoisie." 

"The political impotence of the German bourgeoisie in 
past and present is what distinguishes the political life of 
Germany from that of the other advanced countries, and 
has assigned to the German proletariat the mission not 
only of solving its own strictly proletarian problem, but 
also of accomplishing the work left undone by our bour- 
geoisie." 6 

Liebknecht shows historically how profoundly German 
the problems of the German Socialists have been, and every 
Congress of the German Party proves that this is truer than 
ever to-day. Indeed, the German problem is so special, and 
the German need for the first rudiments of democratic 
government is so pressing, that Liebknecht's question, 
"whether we shall remain a Socialist party or whether we 
shall bridge over the Rubicon of the class struggle and be- 
come the left wing of the bourgeois democracy," is being 
more frequently asked to-day than when he first proposed 
it — ironically — in 1900. 7 

Yet Liebknecht himself was largely responsible for the 
policy that has led the Party recently not only to become 
a part of the bourgeois democracy, but even to compromise 
its struggle in this limited sphere. For he is largely re- 
sponsible for the dogmatic and extreme separation of 
theory and tactics which has marked the German movement 
and has sterilized its thought, on the one hand, and ham- 
pered its practical activities, on the other. That principle 
which is not available for practice is not only useless but 
harmful. And practice which is not guided by principle, it 
is clear, is guided by other motives. 

Liebknecht, for example, in explaining why he advocated 
the Gotha program, which was so bitterly attacked by 
Marx, acknowledged that what Marx said against the plan 
was "theoretically correct to the last letter," but claimed 
that "theory and practice are two entirely different things." 
Now it is better far to have no conscious principles than 



i(r . -^~~" 



GERMAN SOCIAL-DEMOCRACY AS A LABOR PARTY 337 

deliberately to put them on the shelf every time there is a 
crisis and the practical need for them is greatest. 

The Gotha Congress of 1875 struck out a proposed de- 
mand for a governmental guarantee against unemployment 
because it ''could not be carried through" — a demand, by 
the way, unanimously declared as immediately practicable 
by the 1913 Congress. 8 The demands decided upon were 
placed on the program because they were regarded as 
"highly practical and in great part accomplished in other 
lands." Yet Liebknecht pointed out that the Gotha Con- 
gress was aware that some of its demands would "not be 
realized under the present state." 

Liebknecht and the Gotha Congress, then, excluded some 
demands because they thought they were not to be realized 
under the present State and included others for the same 
reason. But the main idea, still further developed at Er- 
furt, was to include only such demands as were likely to be 
granted by "bourgeois-democrats." And the Congress of 
1905 (at Breslau) took the definite stand that the Socialist 
platform should contain no demands whatever that are dis- 
tinctively Socialistic. This Congress voted down a re- 
port on the agricultural question on the definite ground 
that it recommended such demands, and "proposed to the 
capitalistic State tasks which can only be carried out by 
a State in which the proletariat has gained the political 
power." 

German conditions, then, led the party to two policies. 
(1) merely democratic reforms were placed upon the pro- 
gram as "demands" and so came to be regarded as Socialis- 
tic, and (2) many of these democratic reforms were so badly 
needed, and yet were still so far from attainment, that the 
practical work of the party, aside from mere education, 
was devoted exclusively to their promotion. 

Only one step remained after the Erfurt Congress to make 
the Party — in its practical activities — completely bourgeois- 
democratic. It still failed to adopt, for many years, some 
of the reforms that bourgeois-democrats have most at heart. 
The cost-of-living question, for example, was formerly 



338 APPENDIX 

considered as quite subordinate to the wages problem. The 
Congress of 1876 declared: 

"The Socialists of Germany are not interested in the 
fight between Free Trade and Protection which has arisen 
within the ranks of the propertied classes. The question 
is merely one of expediency, to be decided in each instance 
upon its merits." 

And now, as I shall show later, this question has become 
the central point of all Socialist activities. The only "bour- 
geois-democratic" reform still neglected, apparently, is gov- 
ernment ownership. The Socialists of Germany have 
never shown, and do not now show, much enthusiasm for 
this type of reform. They agree with Bebel that govern- 
mentally operated industries "are exploited by the state ac- 
cording to the same capitalistic principles as if they were 
privately owned." 9 And, according to Bebel's Memoirs : 

"The Congress of 1876 declared in favor of nationaliza- 
tion but against acquisition by the Empire, because such 
acquisition would serve only the interests of the aristo- 
cratic and militarist State; the revenue would be wasted 
on unproductive expenditure whereby the Empire would 
acquire further power — a power hostile to democracy . . . 

"The railways, in the opinion of the Congress, should be- 
come the property of the various Federal States, not of 
the Empire." 10 

And as late as 1895 (at Breslau) the principle of the Con- 
gress of 1876 was again re-affirmed. For another of the 
reasons given against the agricultural project already men- 
tioned was that it "gave new means to the exploiters' gov- 
ernment and so made the class struggle of the proletariat 
more difficult." 

This principle would forbid every grant of money to 
bourgeois-democratic governments. 

But this question has now resolved itself into others. 
And the Socialist Reichstag members, through Hoch, have 
declared that they would favor government ownership with 



GERMAN SOCIAL-DEMOCRACY AS A LABOR PARTY 339 

certain guarantees as to wages and prices, provided the 
profits were expended either to reduce the cost of living 
by decreasing direct taxes, or for social reforms. 

The Socialists, then, are ready to-day to support govern- 
ment ownership also — under guarantees entirely in the spirit 
of bourgeois democracy. So they have finally adopted the 
whole program of the progressive small capitalists. 

The very first year when the enfranchisement of the 
working class became a reality — with the repeal of Bis- 
marck's anti-Socialist laws, which for ten years had made 
both political and labor union organization impracticable, 
and so had blocked all progressive advance, even of the 
bourgeois-democratic variety — the proposal came, from von 
Vollmar and others, that the Party should concentrate its 
attention on lowering the tarifTs on necessities, on labor 
legislation and on protecting the rights of labor unions — a 
policy that has conquered the Party absolutely since the 
Reichstag elections of 1912. In 1891, and until 1913, von 
Vollmar was outwardly voted down by the Socialist Con- 
gresses. But his idea had really won when the Erfurt pro- 
gram excluded all except purely bourgeois-democratic de- 
mands, and again in 1892, when the Party resolved that the 
"so-called State Socialism, in so far as it concerns itself 
with bettering the condition of the working people, is a 
system of half-reforms, whose origin is in the fear of So- 
cial-Democracy." For, if the Socialists have the power to 
drive the capitalists by fear, to half-reforms which the 
latter would not grant without compulsion, why not secure 
all the reforms desired, by the same method? 

But now began the last and the present stage of this evo- 
lution. If the capitalist progressives voted for these re- 
forms as well as the Socialists, why could not the capitalist 
progressives claim equal credit for them? Had not the 
Party explicitly stated that these reforms were mostly, if 
not wholly, bourgeois-democratic? The Erfurt program 
(1891) was supposed to answer this question. 

The Erfurt program was divided into two parts, a pre- 
amble which dealt wholly with "the final goal of the pro- 



340 APPENDIX 

letarian class movement" as it arose "out of the historical 
development of modern bourgeois society," and the pro- 
gram itself, which sought "to mark out the practical paths 
of the Party on the basis of this society." 1X Thus every 
thing that is practical was regarded as being purely bour- 
geois, while Socialism had to rest content with mere theory, 
and "the final goal" — the very opposite principle to that of 
Marx, who (in the program of the Communist Manifesto) 
had concerned himself exclusively with transitional 
measures which were in themselves neither "immediate" 
nor "ultimate," neither wholly bourgeois nor wholly Social- 
istic. These measures, he understood and stated, had So- 
cialistic value only as the proletariat secured control over 
government. The Erfurt program purposely excluded all 
reference to such measures, for example, government own- 
ership of land, precisely because, if they are to be Social- 
istic, they must assume at least a partial proletarian con- 
trol of government, and confined itself solely to reforms 
that assumed a purely capitalistic control. 

The Erfurt program, which still holds, left the Party, 
therefore, without any policy distinctively Socialistic or 
even transitional. The partisan politics of the denial of 
the existence of any middle ground is obvious. But how, 
then, was the question to be answered : What is Socialism 
practically? Evidently most people would turn to the prac- 
tical part of the program for their answer, and forget that 
it was avowedly and purposely composed wholly of purely 
bourgeois-democratic reforms. And now the partisans of 
the State Socialist or State Capitalist policy, taking ad- 
vantage of this fact, have persuaded the Party itself that 
these measures contain the whole of practical Socialism, 
the rest being a declaration of mere theory and of an ulti- 
mate goal without influence on the present. Nor has the 
progress away from principle stopped here, for now, as I 
shall proceed to show, even some of these "bourgeois-demo- 
cratic" reforms are being treated as mere "ideals." 

Recognizing the importance of bourgeois democracy for 
Socialist purposes, and seeing the weakness of the bourgeois 



GERMAN SOCIAL-DEMOCRACY AS A LABOR PARTY 34I 

democrats in Germany, the German Socialists decided they 
would have to do their work for them. They did not see 
that the weakness of the German bourgeois democrats or 
progressives, which came from historical economic causes 
peculiar to Germany, would disappear with these causes. 
Many middle-class social groups that vote with the pro- 
gressives in other countries, moreover, in Germany, had de- 
spaired of their own class, and gone over to the Socialists — 
but naturally only in so far as the Socialists had become 
bourgeois democrats. This easy method of political growth 
has now so increased the prestige and momentary power of 
the Party that it will probably abandon it only when forced 
to do so, that is, when these elements leave the Party. 

Yet what is usually called "State Socialism" (I have 
:alled it State Capitalism), that is, the typical modern form 
Df bourgeois democracy, began first of all in Germany, 
[t was not recognized by the Socialists, however, as being 
the next great social movement, and Mehring says it con- 
sisted merely of a few isolated individuals with "no com- 
mon principles." The same might be said, of course, of 
the early beginnings of Socialism or of any great historic 
movement. The greater use of the State under Capi- 
talism was naturally viewed by the Socialists — in the light 
of German history — as marking the landlords' and large 
:apitalists' policy — rather than that of the small capitalists. 
Liebknecht regarded it, for example, as merely an alterna- 
tive form of capitalism, rather than a future transitional 
stage of small capitalist democracy. "State Capitalism," 
be wrote, "is the worst form of capitalism, since it concen- 
trates the economic and political power in the same hands, 
ind can exercise the power of exploitation and oppression 
more severely and intensely than can private capital." 12 
Thus State Capitalism appeared as a reaction. The truth is 
that Liebknecht, like the German Socialists generally, did 
not expect any bourgeois democratic society between the 
present regime and Socialism. He regarded the small 
farmers and shopkeepers as a class that must become thor- 
oughly oppositional and progressive — but only as a part of 



342 APPENDIX 

the Socialist Party. What he expected has already hap- 
pened in some measure, but it means, not that these people 
have become Socialists, but that the Party has, in some 
measure, become a bourgeois-democratic or State Capitalist 
party. Similarly Kautsky says that the Socialists are the 
only anti-capitalist Party. This is true for Germany, but 
it does not mean, as it might seem to mean, that all the 
non-capitalists who vote for the Party — professional men, 
clerks, officials, labor aristocrats — have become Socialists, 
but that the Socialist Party has in large measure taken their 
position and is opposing capitalism for the benefit of State 
Socialism or State Capitalism. 

Indeed this changing composition of the Party member- 
ship is the only real, concrete, economic explanation of the 
revolution in Party policy that is taking place. For how 
could there be a more complete revolution in the very nature 
of the movement than to take issues that formerly were 
totally excluded and to make them the centre of all Party 
effort? The question of the consumer, the cost of living 
question, was formerly excluded as being one that appealed 
to all the population except the very wealthy — and there- 
fore did not draw class lines. That is, the demand for a 
lower cost of living was rightly regarded in itself (i. e., un- 
less it was accompanied by the fixing of wages, and then 
carried to a point so as to cut into profits) as being, not a 
Socialist issue, nor even a radical issue, but merely an anti- 
reactionary one, to which the mildest progressives, and 
even conservatives, could give their support. I have shown 
that a lower cost of living is not only an object but an in- 
dispensable object of State Capitalism and State Socialism. 

Yet the whole German Socialist movement now rests 
chiefly on this issue and on the demand for labor-reforms 
— which are simply another method of lowering the cost of 
living to the laborer. Kautsky has even found a new basis 
for Socialist economics : "The consumers' interest is funda- 
mentally that of the working class. The producers' interest 
is the interest of the capitalist class." This advocacy of the 
consumers' interest will be recognized as the basic principle 



GERMAN SOCIAL-DEMOCRACY AS A LABOR PARTY 343 

also of the British Liberals and of Bryan Democrats in this 
country. The last report of the Executive Committee of the 
German Party begins with a statement about the leading 
issue, the increased cost of living, attributes it chiefly to 
high tariffs, and denounces the agricultural interests as 
largely responsible. Yet this cost of living has risen at 
almost the identical rate in Great Britain, where there are 
no high tariffs, and in America, where there is no legisla- 
tion whatever bearing on the high cost of living that can 
be attributed to the agricultural interests. 

Formerly the Socialists considered the high cost of living 
only in connection with wages. And, obviously, if there is 
to be any "class struggle" between employers and employees, 
it must be over the wage question. The cost of living must 
be regarded as a part of this issue. Money wages must in- 
crease faster than the cost of living — if there is to be any 
improvement in real wages. To accomplish this improve- 
ment there must be some general limit and check to the 
rising cost of living. But in proportion as the latter is 
made the main issue the workers seek relief in that direc- 
tion. And thus the German Socialists themselves are doing 
the utmost that possibly could be done to distract the labor- 
ers' attention from the wage question and to prevent the 
development of a " class struggle?' against employers. 

How, now, can we account for the fact that a Party, the 
majority of the members of which are wage-earners, no 
longer centers its attention on the improvement of wages? 
There is only one answer. A part of these wage-earners, 
the part which holds the balance of power in the Party — 
between the masses of workers and the Party's middle-class 
members, has become conservative. As in all other coun- 
tries, this "aristocracy of labor" in Germany has certain 
agreements with employers (in Germany lasting usually 3 
years) which it considers more or less satisfactory and 
hopes to improve only by a very conciliatory policy. The 
cost of strikes often exceeds the relatively small gains made 
by this means. Bound by these long contracts the only 
hope the skilled workers have of improving their condi- 



344 APPENDIX 

tion in the meanwhile, is to lower the cost of living. More- 
over there are more than a thousand separate long-term 
labor contracts in Germany making many great co-ordinated 
strike movements impossible. And, finally, while the Ger- 
man workers are better organized than in any other large 
country, Germany also has more "yellow" organizations, 
which we might call anti-unions, while railway unions and 
many others are forbidden by the government. Thus the 
union position is, on the whole, far weaker in Germany 
than in France, England, or the United States — though not 
through any fault of the German workers. 

Now the German unions — dominated by the older, richer 
and more conservative — have come into full control of the 
Party — though they embrace only a fraction of the German 
wage-earners. And they have filled the Party with their 
feeling of weakness. This had to be, in Germany, for the 
weakness of the unions means the weakness of the Party — 
in spite of the apparent strength lent to it by large num- 
bers. But for such a movement to be held up any longer 
as a model to the workers of other and more advanced 
countries, and for it to continue to dominate the Inter- 
national movement, is an anachronism. It is true this aris- 
tocracy of labor everywhere controls both unions and Party, 
and everywhere stands chiefly for State Socialism. But 
at least it is, in some countries, uncompromising in its 
bourgeois radicalism, in its fight against nationalism (mili- 
tarism) and in its struggle for political democracy — which 
can no longer be said of the German Party. (See Appen- 
dix C.) 

The present situation is reflected in the remarks of Ger- 
many's largest newspaper, the Berliner Tageblatt, on the 
occasion of the death of Bebel : "The leaders of the unions 
threw their whole power and influence on the side of the 
revisionists" and the result was that Bebel, who had fought 
his whole lifetime against the revisionists, had finally "united 
himself with this new power." 

So we find in the electoral appeal of the Socialists — on 
which they sought election in 1912, and obtained no seats 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 345 

in the present Reichstag, no reference whatever to the 
wage question. The issues now are : 

(1) The demand for legal rights for the unions. 

(2) Opposition to increased military expenditures. 

(3) Opposition to increased taxes and the rising cost of 
living. 

(4) The demand for political democracy. 

All these are policies that would be endorsed by all non- 
Socialist democrats in advanced countries. 

But since this election of 1912 the German Socialists, 
under the leadership of the aristocracy of labor, have even 
deserted a part of this "bourgeois-democratic" program 
and have taken a position that leaves them much less radi- 
cal than many non-Socialist democratic groups in other 
countries — as I shall now show.. 



C— THE GERMAN SOCIAL-DEMOCRACY AS A PROGRES- 
SIVE PARTY 

Every few years the German Social-Democracy holds a 
Congress that re-shapes German politics and moulds the 
whole International Socialist Movement. Such a Congress 
was that at Dresden in 1903, which decided — both for 
South Germany and, ultimately, for all Europe — that So- 
cialists could not become Ministers under coalition govern- 
ments, unless temporarily and in very exceptional crises. 
Again at Jena (1905) the General Strike was endorsed as 
a possible means of political warfare. At Magdeburg 
(1910) the principle was strongly reaffirmed that Socialists 
cannot afford to vote for the budget of a non-Socialist 
government. But more important than all these was the 
Congress of September, 19 13, which practically reversed 
the Magdeburg decision and exonerated the majority of the 
Reichstag members who had not only voted the government 
money, but had voted it for the specific purposes of "the 
most monstrous military bill that a government ever dared 
to offer a country" — to use the expression of Herman Wen- 
del, one of the Socialists who voted for the bill i 



34-G APPENDIX 

This action marks a revolution in Socialist tactics, typical 
of what is now going on in every single country where 
Socialist parties have become a factor in practical politics. 
Whether this revolution will leave anything in the actual 
practice of these parties of what has hitherto been known 
as Socialism is a problem of secondary interest to the non- 
Socialist public and would lead us far afield. And, besides, it 
has become a matter of common knowledge, in recent years, 
that all the practical measures advocated by the Socialist 
program are also shared by radicals and progressives, and 
this has generally been admitted by the Socialists of every 
school — for example, by Kautsky and Hillquit. 

The most interesting problem now is, not whether the 
Socialist parties are in practice radical (progressive), but 
what is the quality of their radicalism (or progressivism) ? 
Many who are not Socialists believe that the Socialists are 
the most thorough-going, effective, powerful, reliable and 
uncompromising of all the forces making for radical and 
democratic reform. Nor can it be doubted in countries 
like Germany, where Socialism is oldest and most power- 
ful, that it is more or less superior to other German parties 
from this standpoint. 

The new problem brought up by the historic Congress 
of 1913 is this : In what ways and to what degree do the 
Socialists serve the cause of radical reform better than the 
progressive and radical parties, and in what ways are they 
to be put on the same level — as far as such reform is con- 
cerned. 

The Social-Democratic Party of Germany has a world- 
wide and well-deserved reputation in democratic and re- 
publican countries for the progressive stand it has taken 
on certain matters which we know have no inseparable con- 
nection with Socialism. Among these are its opposition to — 

(1) Clericalism 

(2) Landlordism 

(3) Plutocracy 

(4) Militarism (Imperialism) 

(5) Monarchism (Absolutism) 

(6) Bureaucracv 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 347 

As to all these matters, which take up most of the attention 
of the Party, perhaps 90 per cent of the people of America, 
including all progressives, are cordially with the German 
Socialists. 

But, now, what do we find since the recent revolution 
in Socialist policy? We find the Party as effective and 
united as ever as to some of these questions, but hopelessly 
ineffective and divided as to others. The campaign against 
clericalism, landlordism, and plutocracy (represented by the 
Centre, the Conservative and the Liberal Parties, respect- 
ively) is stronger than ever. On the other hand, the cam- 
paign against monarchy, bureaucracy and militarism has 
been thoroughly compromised. 

Does this mean that radical and democratic reformers 
will have to turn from the Socialists to the "Progressive 
Party"? By no means. For the Progressives are only 
strong where the Socialists are strong, and are even weaker 
than the Socialists where the latter are weak. But what 
is the outcome, then ? One that will seem strange indeed to 
those who have not followed the extraordinary changes in 
the German Party, but indisputable when it is once ex- 
plained. The chief hope for the establishment of a demo-, 
cratic constitution in Germany — such as that of Australia or 
of several conservative agricultural States of our West, and 
having therefore no special connection with radical Social- 
ism — now lies in the "radical" wing of the German Socialist 
Party. 

Here the non-Socialist reader will have to dismiss an old 
and deep prejudice against the "radical" Socialists because 
they were at one time called "revolutionists." In reality 
their practical activities — republicanism, democracy and 
anti-militarism — are merely radical, and they themselves, as 
well as the German press generally, reject the appelation 
revolutionary. Because of this prejudice, however, the non- 
Socialist foreigner has been taught to rejoice at every defeat 
of this left wing and every victory of the opportunist wing 
of the Socialist Party. This was an error from the first. 
For we ought to prefer to see a man or a party true to his 



34& APPENDIX 

(or its) principles, even if they are wrong. The Party- 
may easily change its theories, it cannot so easily change the 
habit of compromise, of yielding the larger to the smaller 
expediency, to use one of John Morley's definitions. Since 
the recent Congress the fact that this prejudice against the 
radicals was an error should be clear to all. For the Ger- 
man Socialist Party, which began by compromising its So- 
cialism, has now compromised its democracy. 

The chief hope for democracy in Germany now lies in 
the "radical" wing of the German Party, to use their own 
expression. And no democrat, after he has learned the 
facts, can fail to regret that for the first time the radicals 
have been reduced to a minority. Moreover, they have no 
prospects whatever of regaining control until a new turn 
in German politics, for they were voted down by a vote of 
nearly three to one in the recent Congress and were prac- 
tically excluded from the Executive Committee, though 
they still dominate the chief industrial districts of the coun- 
try, Saxony and the far West, and are very strong in Ber- 
lin. At present they can neither become a majority nor 
leave the Party, for the reason that the issues which hold 
the Party together (and also bind it to the Progressives) 
are capable of immediate solution, that is, are of immediate 
importance, while the issues that separate them are not. 
Clericalism, landlordism and plutocracy have already been 
brought to a standstill by the Socialist and Progressive 
policy in the last Reichstag, and even now cannot be said 
any longer to control the government; they may be def- 
initely defeated at the next election. Absolutism and mili- 
tarism cannot be successfully attacked now; they may be 
successfully attacked after these other enemies have been 
defeated. For, though the timid opposition of the Pro- 
gressives and of the new Socialist majority can scarcely lead 
to the establishment of a real democracy, it may lead to 
important steps in that direction. The very partial charac- 
ter of this victory will further embitter the radical Social- 
ists, making them still more radical, and will at the same 
time largely satisfy the moderates and make them still more 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 349 

conservative. Already 30 Socialist members of the no in 
the present Reichstag are avowedly ready to compromise 
with monarchy, and a similar number favor voting for the 
budgets of non-Socialist governments, while some even are 
ready for participation in non-Socialist governments — an 
opportunity the Socialists were offered this year both in 
Denmark and Holland, and one which the moderate Social- 
ists, who control in Belgium, Bavaria, and elsewhere will 
not long refuse. Then and then only can there be that 
split of the Social-Democracy and that realignment that 
will give us an uncompromisingly democratic party — 
formed out of the left wing of the Social-Democracy. 

The evolution of opportunism in the German Party and 
its growing similarity to other non-Socialist political organi- 
zations have been described as a progress towards common 
sense and even towards public morality. Orth refers to the 
Party, typically, as to a group of school boys. "Gingerly 
they dipped their fingers in the pottage of reality." Such 
phrase-making explains nothing of this great historic phe- 
nomenon. The change taking place is due rather to such 
factors as these : First, that the Party is ever incorporating 
new social classes. Formerly dominated by common work- 
ingmen, the entrance of the clerks and the minor profes- 
sional class has now thrown the balance of power into the 
hands of the aristocracy of labor. Next, becoming more 
powerful politically, the Party has become subject to greater 
external pressure from progressive but non-Socialist groups. 
And, finally, the Socialist voters, who outnumber the male 
party members 4 to 1, have begun to exert a greater internal 
pressure than the latter on Party policy. 

The control of the German Party has this year passed 
from its million members to its four million voters. If the 
Party were governed directly and by referendum, this 
transformation might not have taken place, but the party 
bureaucracy has accomplished it. First, the compromis- 
ers obtained control of the Reichstag group by a vote of 
52 to 37, with seven not voting and sixteen absent, the 
thirty-seven who opposed compromise representing chiefly 



35° APPENDIX 

those members who could expect to be returned at the next 
election if no compromise were made (a number reckoned 
by one of the compromisers, Fischer of Berlin, as forty on 
the outside). For militarism is popular in Germany, espe- 
cially among the clerks, professional classes, and small 
shopkeepers. Not only do these form a larger proportion 
of the four million Socialist voters than they do of the 
million Party members, but in a majority of the constitu- 
encies they, and not the aristocracy of labor (as within the 
Party), hold the balance of power. The Party bureaucracy, 
aided by Bebei's known conservative position, and by the 
Party press, having thus gained control of the Socialist 
group in the Reichstag, then secured a vote of nearly three 
to one in the Party Congress and a practically unhampered 
control of the Executive Committee. 

For twenty years the German Party has offered us, as 
an unfailing practical test of Socialism, its vote against 
the budget, the grant of supplies, or appropriation bill, 
the control of which has been recognized throughout his- 
tory as the one great source, or even the sole source, of the 
power of parliaments. For twenty years Bebel and Kaut- 
sky, and an overwhelming majority, proclaimed this control 
of the purse strings to be the only possible hope for Socialist 
victory. At nearly every Congress the minority presented 
some pretext for making an exception, and for supporting 
anti-Socialist administrations in return for some immediate 
concession. They were answered that to give up the policy 
of financial opposition would be to abolish every real and 
practical distinction between Socialist and non-Socialist 
parties, and to leave Socialism as nothing but Liberalism 
with the addition of a few phrases. 

The steady refusal to vote for the budget or to grant 
supplies, we were told, is the sole hope of effective oppo- 
sition. But the Socialists have also taken great pride in 
their public spirit and practical work for certain other 
causes that they usually admit have no fundamental or 
necessary connection with Socialism. The chief of these 
is anti-militarism. It is true that there are more non- 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 35 1 

Socialists than Socialists at work for this cause. But the 
growth of the Socialist movement has brought about the 
hope, alike among friends and foes, that it might take the 
lead in the agitation. In England the Socialists promised 
they would start a general strike in the transportation of 
military supplies in case of war. The Germans answered 
that the English Socialists have neither the organization to 
do this nor the support of the workers, that to strike in war- 
time in Germany at least, and probably in England also, 
would mean a wholesale butchery of strikers and a tre- 
mendous set-back to the movement. They proposed a bet- 
ter method instead — the method they have hitherto fol- 
lowed — the refusal of money for military supplies. And 
they expressed on a thousand occasions the greatest distrust 
of the English workers because their Labor Party votes the 
government money for military objects. 

But, in 1913, both the basic policy and the chief practical 
work of the Party were thoroughly compromised. On 
the ground of avoiding a threatened increase of indirect 
taxes and securing steeply graduated taxes against the rich, 
the Socialist members of the Reichstag (the minority bound 
by a secret party caucus) unanimously voted the govern- 
ment money for a vast increase in military expenditure. 

That the fight against militarism as well as the still more 
important struggle for a democratic constitution has been 
more or less compromised cannot be questioned. But in 
order to weigh accurately the merits and demerits of the 
Socialists as progressives we must examine the arguments 
and defenses of the compromisers. 

The ground was prepared at a Peace Conference of a 
delegation of Socialists from the French and German Par- 
liaments held in Switzerland on March 1st, 1913. This 
conference declared : 

"If, in spite of our determined resistance, new military 
expenditures are put upon the two peoples, the Social 
Democracy of the two countries will use every effort to see 
that the new financial burdens are shifted onto the shoulders 
of the wealthy and well-to-do." 



35 2 APPENDIX 

This very plausible resolution, though signed only by a 
small group, without any official power to bind either party, 
and without any of the official discussion by the German 
Party, was afterwards made the basis of the official ex- 
planation given by its Reichstag members of the reason 
why they had voted the government increased military sup- 
plies. It was a master stroke of diplomacy. For, after 
such a public declaration of the new policy as that made in 
Switzerland, it could not be withdrawn without a definite 
rebuke to those who signed it, and this would be a serious 
blow to the reputation of the Party. 

Yet the declaration contained in germ the whole of the 
revolution in party policy that has taken place. It pre- 
supposes that to vote the government taxes taken from the 
rich and well-to-do is a more effective way to fight mili- 
tarism than to vote to the bitter end against all grants for 
military purposes, no matter how hopeless the struggle may, 
for the present, seem to be. 

The second step occurred when, after a severe quarrel 
in the caucus, the majority of the Socialists in the Reichstag 
voted to put military expenditures and the military taxes 
into separate bills. By then voting against the first measure, 
though they knew it would pass anyway, they felt they had 
done their duty. "The military bill is law," they declared 
in italics, and then proceeded, with this as an excuse, to 
vote the government the money to make this law & fact. 
They said they did this on the ground that the increased 
taxation of the "possessing classes" for the cost of arma- 
ment would help to cool their sympathy for further agita- 
tion and facilitate the struggle against militarism. 

This plausible statement brought up three sets of ques- 
tions concerning Socialist policy : 

(i) Political policy generally. 

(2) Anti-military policy. 

(3) Tax policy. 

The supporters of the new political policy declare that an 
opposition party may vote to grant a hostile government 
money for purposes it disapproves, if this money would 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 353 

have been granted the government anyway without such a 
vote. The resolution on this subject, proposed by Wurm, 
and adopted by the Congress, declared : 

"Every direct tax [as well as every indirect tax] must 
be opposed by our Comrades, even if it falls upon surplus 
value exclusively [i. e., even if none of it can be shifted 
onto wages] , whenever the purpose for which it is expended 
is against the interests of the working class — except in case 
the opposition of our Comrades would not hinder the pass- 
ing of the measure opposed and would result in a less favor- 
able taxation of the working class." 

This resolution allows — in one case, at least — the support 
of the hostile government because that hostile government 
has a majority in any event, and the arguments used in 
defense of the resolution make of this a general principle. 
Thus the importance of minority opposition is denied. A 
government or governmental measure, according to this 
principle, need not be voted against if it cannot be defeated. 
The policy of gradually building up an effective opposition 
by voting consistently against every measure opposed, and 
thus gradually increasing the difficulties of the government, 
is abandoned. In this case, for example, the refusal of the 
Socialists to vote for the government would have led either 
to a compromise and to somewhat less favorable taxes (but 
not, as I shall show, to a complete substitution of indirect 
taxes for direct taxes as the compromisers asserted), or to 
a dissolution of Parliament. In either case the govern- 
ment's difficulties in raising money would have been greatly 
increased at a relatively small cost to the Socialists. Of 
course the truth underlying the whole case is that the new 
Socialist knows that anti-militarism is not very popular any- 
where in Germany. Their refusal to acknowledge this mo- 
tive, for political reasons, is the origin of the contradictory 
position they have fallen into. They simply relaxed their 
anti-militarism because it was unpopular, especially at the 
moment. We are not interested in underlying motives, how- 
ever, but in the policies to which they have led. 

The Wurm resolution favors anti-militarism only in those 



354 APPENDIX 

cases when it costs nothing to favor it. The principles of 
the Party, or the wider expediencies, were held to in the 
past, according to his explanation, only because they did 
not then interfere with the smaller expediencies. But now 
that the Party has power (with in deputies) an uncom- 
promising oppositional policy would cost something, would 
demand the sacrifice of the chance for certain small but 
immediate gains that has now come within the Party's 
reach. 

As Geyer, who led the minority in the Party Congress, 
pointed out, "the government would be mad if it did not 
make use of the situation. . . . If it wants the support 
of the Social-Democrats for direct taxes, it only needs to 
introduce a bill with indirect taxes." By thus proclaiming 
over and over again that they will always vote for "the 
lesser of the two evils" the Socialists have put themselves 
in the hands of the government. 

The new political policy is that which the Germans call 
"Realpolitik," a term used by those who recognize current 
political forces to the exclusion of the broader expediencies. 
The chief opposition Party of Germany (the Social Democ- 
racy) now confesses that its actions must be determined, 
not wholly by its own principles, but largely by the actions 
of its enemies. "In politics, too," wrote Wurm, "there is a 
law of self-defense." Very little reference is now made to 
principle and much to "Notlage" and "Zwangslage" — 
which means that the situation is such that the Socialists 
were absolutely "compelled" to such and such an action by 
"sheer necessity." It is difficult, however, to see how any 
critical situation can fail to have some element that could 
be so called. Something must always be sacrificed, some 
price must be paid, if an opposition really intends to make 
the goal it strives for the main issue. There will always 
be some bribe, on the other hand, that the government can 
offer to an opposition that is not prepared to forego any 
considerable offer of the kind, or to pay any price for its 
principles. "Realpolitiker" in the government will always 
be able to create a "Zwangslage." Indeed Wurm has al- 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 355 

ready spoken of the paramount necessity of self-defense as 
a permanent condition existing in all Parliaments and as an 
inevitable result of the very fact that the Socialists are in 
the minority. 

In the whole discussion a single session of the Reichstag 
was considered as the basis upon which everything was to 
be decided. That Party which formerly claimed to be the 
most idealistic and scientific of all — looking a generation or 
perhaps a century ahead — now avowedly lives from year to 
year. Yet Home Rule for Ireland took half a century of 
uncompromising and, temporarily, hopeless opposition. 
What can be done in a single year for the far more diffi- 
cult causes of anti-militarism and democratic government 
— to say nothing of those more radical policies of the So- 
cialist and progressive programs that are no longer even 
discussed by the Reichstag Socialists? The explanation, 
however, is at hand. Not only Fischer, but David, as the 
Vorwaerts pointed out editorially, were chiefly concerned 
with the fact that to close the session by sacrificing the 
popular taxation of the rich on the altar of unpopular anti- 
militarism would mean the "decimation" of the Socialist 
representatives in the Reichstag in the following election — 
reducing them, that is, to the forty-odd who could be re- 
elected exclusively by Socialist votes. 

We come now to the new anti-military (or military) 
policy. It will be noticed that the Wurm resolution prefers 
the cause of direct taxes to that of anti-militarism. It pro- 
vides for voting against military grants even — in some cases 
—when this money would be granted in spite of the Social- 
ists' opposition. So it recognizes that such minority oppo- 
sition has a practical value. Secondly, it agrees with all 
Socialists that the Party must vote for direct taxes to re- 
place indirect. When militarism and direct taxes are to be 
bound together in a single measure, then the Socialist 
position evidently demands their separation, so that a vote 
may be cast against the former measure and for the latter 
(the very opposite action to that taken by the majority of 
Reichstag Socialists). The Wurm resolution, however, de- 



35^ APPENDIX 

mands not this separation, but that taxation reform be voted 
even at the cost of anti-militarism. 

Anti-militarists in the Party, therefore, put this case to 
Wurm : Suppose all the organized Socialists were about to 
be exiled to the Cameroons, would he favor giving the gov- 
ernment taxes for this purpose, provided they were direct? 
Wurm's negative answer can only have one interpretation. 
He would not support such a grant, but he would support 
a grant for military purposes. Militarism, then, is not the 
worst of all evils. Indeed this argument forced Wurm prac- 
tically to abandon the whole of his elaborate formulation 
of policy and to lay chief weight on "the general political 
situation" — a formulation evasive enough to satisfy any 
professional "diplomat." Stadthagen even suggested that 
Wurm and Siidekum ought to be taken into the Ministry on 
the ground that they had suggested "the best ground for 
every military bill" — the threat of a worse alternative. 

The Socialists' new military policy is based on the prop- 
osition that if the rich pay the taxes they will be less anx- 
ious for increased armaments. But this policy had very 
little effect where it has been tried — and Bernstein admits 
this for England. Moreover, by the same reasoning, the 
comparative lessening of the military burdens of the middle 
classes, which is a part of this policy and of the new law, 
will make imperialism more popular among that very ele- 
ment which is now coming into political power. And even 
if those profiting from militarism, imperialism and colonies 
paid the whole of the military bill, they might find that it 
still gave a credit balance. Only if the shifting of the bur- 
dens onto their shoulders actually made the rich oppose 
these expenditures would this argument be proven. This 
is just what they did not do and not one of the compro- 
misers even claimed to expect that they would. 

The new law will evidently make militarism more popu- 
lar. Incomes under 5,000 marks are exempt. Thus at least 
90 per cent of the German people, including the majority 
of small officials, professionals, shopkeepers, clerks, etc., can 
now vote for militarism without paying for it. Wendel says 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY ^S7 

that the fact that "comparatively small incomes of between 
5,000 and 10,000 marks were drawn upon for the defense 
fund had an educational purpose, for these are the incomes 
of all those elements of society, such as school principals, 
judges and retired officers in the army and navy societies, 
who are the loudest shouters for military increases, but who 
never before had to open their pocketbooks." On the con- 
trary these classes were almost as heavily hit by the former 
increases of indirect taxes for military purposes as were 
the working men. To these classes the payment of one 
per cent on their incomes is far less burdensome than a 
large increase of indirect taxes would have been. Also they 
like to see the wealthy heavily taxed for many other reasons, 
and they may be expected to become greater militarists 
than ever now. 

No wonder that even the Vorwaerts, which defends the 
action taken by the Party, admits that "not the old fight 
against militarism and imperialism on the ground of princi- 
ple has been kept in the foreground, but the fight about the 
form of the taxes required." Yet this old fight was sup- 
ported by nearly half of the Socialist members of the 
Reichstag and by 140 of the 500 members of the Socialist 
Congress, who brought forward a resolution that "all bills 
proposed in the Reichstag for the strengthening of militar- 
ism, including taxes providing for the cost of militarism, 
whether the taxes proposed are direct or indirect, are to be 
opposed." This resolution was attacked by the Vorwaerts, 
however, and voted down by a large majority. 

If the Party deserted its anti-military position, then, it 
did so deliberately. Indeed, the ground was prepared by 
Bebel at the Leipzig Congress of 1909. And the Chairman, 
Singer, warned the Party at the time that it had stepped 
upon the inclined plane of compromise, on which there was 
no stopping until it reached the bottom. 

The argument used by the South German Socialists when 
they have wished to support Liberal but anti-Socialist gov- 
ernments is a much better one. The chief question in South 
Germany has usually been some governmental project to 



35§ APPENDIX 

improve the wages and conditions of governmental em- 
ployees. Could the Socialists refuse a government its an- 
nual supplies, they asked, when they were being used largely 
for such purposes? And now that the national Farty has 
given the government money specifically marked for mili- 
tary purposes, how can it refuse money for the less harm- 
ful and even beneficent objects which are contained, in some 
measure, in almost every budget ? 

The Party, it is true, is still as anti-military as any other 
German political group — even though it is no longer alto- 
gether oppositional on this question. But there are non- 
Socialist political groups in France, England and America 
that go much further for international peace and cater less 
to the fluctuations of popular opinion. Even in Germany 
the Socialists (such as Wendel) admit that there was a 
stubborn resistance to militarism among Liberals and Cath- 
olics as late as 1893. Surely this opposition may still be 
revived, in view of the general political advance of all 
parties everywhere ; that is, if the Socialists decide to lead 
the way to a decade-long anti-military campaign, instead of 
surrendering to the government — as at present — for a price. 

We now come to the new taxation policy. The resolu- 
tion of the minority of the Congress, just mentioned, also 
wanted the Party to rest satisfied with its old principle that 
"existing indirect taxes are to be replaced by direct taxes," 
and to refuse to vote for new taxes — even though direct — 
unless they were to be used for the purposes of social re- 
form. But even the most practical non-Socialist reforms 
have now become distant "ideals" to the Socialist right 
wing. The chief anti-militarist reform — a militia with uni- 
versal conscription — though surely not very radical, was 
referred to by one of the leaders, Heinrich Schulz, as being 
a mere "ideal." And now, because the purely bourgeois- 
democratic policy of heavy direct taxation of the very 
wealthy for social reform purposes — and a corresponding 
reduction of indirect taxation and lowering of the cost of 
living (though this moderate policy is already being car- 
ried out by non-Socialists in other countries) cannot be 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 359 

introduced in Germany until a bourgeois-democracy is estab- 
lished, a leading article in the Neue Zeit (by Rudolf Hil- 
ferding) speaks of this reform also as a distant "ideal," 
having little relation with present politics. 1 

The old principles are now abandoned. But for what 
price? The radicalism of the new German tax law, when 
it was first proposed, was heralded all over the world. But 
the law that finally passed — though a great advance for 
Germany — was by no means so radical, according to the 
Socialist minority, as to justify a complete reversal of the 
previous stand against militarism. The new taxes are of 
three kinds. All three exempt the poorer and tax heavily 
the richer classes. The income tax is typical. Exempting 
incomes under 5,000 marks, it gradually increases until it 
reaches eight per cent at 500,000 marks, a level only one 
per cent higher than our new income tax. It is true it 
reaches this point sooner and the exemption is lower. But 
this tax, though it is also for a supposed military emergency, 
does pot compare with our Civil War tax of 5 per cent on 
incomes above $600 and 10 per cent above $10,000 — a tax 
which remained until 1867; and even then a flat rate of 5 
per cent was levelled on all incomes above $1,000. Cer- 
tainly, then, this German tax law, though very valuable, 
was scarcely worth the extremely high price paid for it. 

The compromisers asserted that, if they had not voted 
for direct military taxes, indirect taxes would have been the 
result. To this argument the "radicals" gave several an- 
swers. First, that the German masses are already taxed to 
the limit, and that the indirect taxes, therefore, would not 
in any event be much increased, because such an increase 
would not bring in much new revenue. It is well known 
that in proportion as customs tariffs become prohibitive they 
yield less and less return, and there can be little doubt that 
in Germany they have approximately reached this point. 
As to internal or excise duties, the German workers have 
already shown their readiness and ability to use the boycott 
effectively against both beer and spirits and there is little 
more governmental revenue to be obtained in that direction. 



360 APPENDIX 

Excessive taxes, moreover, decrease consumption. Not only 
would this injure business directly, but any further increase 
in the cost of living would so menace the lives, health and 
efficiency of the workers that all far-sighted employers 
would oppose it. So, if indirect taxes had been increased 
in this instance (as a result of a Socialist vote against all 
new military taxes, whether direct or indirect) the increase 
would certainly not have been very great and would have 
added only a trifle to the cost of living. Next, taxes can 
usually be more or less shifted. The rich may shift a part 
of their taxes back onto the shoulders of the poor, and 
vice versa. If the poor were still further taxed, the unions, 
if they amount to anything, ought to be able to keep wages 
moving at least as fast as prices. Finally any loss for fu- 
ture social reform from failure to establish a precedent for 
the heavy taxation of the rich would be a trifle compared 
with the sacrifice of 140,000 new soldiers drawn from the 
people, which draft was facilitated by the new Socialist 
policy. Though this new conscription might not have been 
prevented this year, certainly a strenuous resistance would 
prepare the way for the future victory of anti-militarism 
better than to vote the government the money it requires. 

The assumption of the compromisers is that the high cost 
of living is due in very large part to indirect taxes, and it 
is common (as in Wendel's statement in the New Review) 
to attribute this world-wide phenomenon wholly to that 
cause. Yet even in Germany the government has not been 
able to raise the tariff on "food articles and the absolute 
necessities of life" in recent years (the period of the most 
rapid rising prices), unless "brandy, beer, tobacco, etc.," 
are such absolute necessities. For it was on these latter 
that the last indirect taxes were levied in 1907. They were 
only $125,000,000 at that, and, after being distributed 
among the 75,000,000 people of Germany, could not have 
added much to the steady increase in the cost of living, 
amounting to 30 per cent from 1900 to 1912, even if we 
include beer, brandy, and tobacco as necessities. 

Undoubtedly it is difficult to keep wages up to a rapidly 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 36 1 

rising cost of living, even though the community as a whole, 
including many employers, desires it. But indirect taxes 
(though causing a considerable part of the high cost of liv- 
ing) have very little to do with the rise in the cost of living 
— which nearly the whole civilized world opposes and will in 
time correct. And even if the cost of living continues to 
rise the most immediate remedy for working people would 
seem to be better labor unions and a more rapid increase 
in wages, rather than to wait for such slow remedies as 
promise materially to reduce living cost, such as the techni- 
cal improvement of agriculture, the organization of agri- 
culturists, the governmental use of land rent for agricul- 
tural purposes, or the proposed reorganization of the dis- 
tribution of food products. 

As between the two possible methods of improving the 
real wages of the majority of working men, i. e., either to 
raise money wages or to lower the cost of living, there can 
be no question that the raising of money wages is the easier 
and more immediately effective — for the reason that far- 
sighted employers, progressive capitalist statesmen and 
"public opinion" are all interested to see that the working 
class does not degenerate physically or deteriorate indus- 
trially. But this does not apply to the classes to which the 
Socialists, having converted the majority of the working- 
men, must now make their chief electoral appeal, the clerks, 
the minor professionals, and minor government employees 
— for, however badly underpaid these classes may be, they 
have no direct means of redress, no possibility of strikes. 
They are therefore extremely interested even in slight re- 
ductions of the cost of living. Similarly the "aristocracy" 
of manual labor, which now has the balance of power in 
the Party, though it is thoroughly organized, cannot hope to 
keep their wages up to the level of a rapidly rising cost of 
living. For, however underpaid, their wages are still above 
the minimum of physical and industrial efficiency. So that 
middle class public opinion and middle class governments, 
even when progressive, oppose every considerable wage in- 
crease, and still more bitterly oppose every strike of this 



$62 APPENDIX 

group. Thus, while the cost-of-living issue is secondary to 
the great mass of working men, it is of first importance to 
the "marginal" voters, skilled wage-earners, clerks, minor 
professionals, etc., who control the Socialist members of 
the Reichstag, and also to a majority of the members of the 
Socialist Party. 

The most immediate practical service that can be expected 
from graduated direct taxes is not any great or direct bene- 
fit to the working class, but the destruction of plutocracy, 
the crushing of the economic and political power of the 
large capitalists, and the establishment of a small capitalist 
democracy. The condition of the laboring masses will in 
the long run be kept at the minimum that employers and the 
government consider indispensable* for their efficiency — and 
taxes paid by working men, their cost of living and public 
expenditures in their behalf are all discounted in making 
this reckoning of the "living wage." Large fortunes, on the 
other hand, can be taxed away and the middle classes will 
get a vast benefit from such a process, both in new oppor- 
tunities and in public employment. It is only as an incident 
to this change that the working class will be benefited. The 
"national minimum" and the high standard of living re- 
quired by the new policy of "national efficiency," which can 
be completely established only as the small capitalists come 
into control, will mean a vast improvement of the strategic 
position of the working class — politically and economically 
— in its struggle for complete industrial democracy. 

From this point of view (the dependence of the work- 
ing class on middle class progress) the new military law 
enacted by Socialist aid was anything but satisfactory. It 
taxed the middle classes too heavily and the rich not heavily 
enough. When this criticism was made Wurm's only reply 
was that "the capitalists could tear out one another's hair 
about that" and that the Socialists could advance them- 
selves "by the conflict within the capitalist class," i. e., with- 
out taking sides permanently with the progressives. In a 
word, the Socialists, far from realizing the possibilities of 
the working class advance as an incident in the develop- 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 363 

ment of progressive capitalism, took a neutral stand between 
progressivism and plutocracy. 

Here, as at many points, the Socialists of the new ma- 
jority are less radical than non-Socialist radicals. Just as 
the unions of skilled labor often act with wealthy employers 
against the general public, and so against a large part of 
the working class, so the Party which these unions control 
is now acting more and more frequently in the same way. 

The control of the Party in the recent Congress by lead- 
ers of unions of skilled labor was brought out still better 
by the discussion of the General Strike than by the debate 
over the new military expenditures. Until this year the 
term, General Strike, has been very unpopular outside of 
Socialist ranks. (Even the German Socialists adopted it, in 
the political form, only in 1905.) But the Belgian political 
strike has shown that, in some countries at least, it is the 
best hope for democracy and even for conservative Liberal- 
ism. If this is so then any unnecessary postponement of 
the general strike in Germany because of smaller parlia- 
mentary or political motives is nothing less than a world 
calamity. For every democrat appreciates the vast impor- 
tance of the democratization of Germany. It is true that 
such a great political transformation cannot be completed — 
if it begins in the near future — at a single bound. But the 
greater the fight made now the more satisfactory will be the 
compromise that will later be effected. 

Here again the unbiased observer must cry out: "A 
plague on both your houses." For, while the Laborites 
want to postpone the general strike "to the Greek Kalends," 
the orthodox want to carry it out without reference to the 
interests or assistance of the middle classes. Scheidemann, 
speaking for the Party Executive, made an effective reply 
to the orthodox, showing that the strike must appeal "to the 
whole people" and that the Socialists must frankly say: 
"We are not only fighting for something that is of use to 
the Social-Democracy, we are fighting for the whole peo- 
ple," and he claimed that the Socialists would have three- 
fourths of the German people with them in such a fight. 



364 APPENDIX 

This is undoubtedly necessary if the struggle is to suc- 
ceed. But all Socialists and many non-Socialists agree that 
only the working people can be relied upon to take the lead 
in the fighting or to make any large sacrifice. When, there- 
fore, this same Scheidemann landed in America, two weeks 
after this speech, and said that this tremendous change is 
to be fought for only if it can be brought about "without 
bloodshed" and that "one life of a working man is worth 
much more than an attempted struggle," we can see that 
he sets no great value on the end to be attained by the 
strike — political democracy. 2 Marx and Bebel had no such 
fear to risk workingmen's lives for the working class, nor 
will the iron-fisted class that governs Germany hesitate to 
shed blood or to risk the lives either of its own members 
or of the people in order to defend its privileges. We can 
see, then, that there is little prospect of democracy in Ger-' 
many as long as the new Socialist spirit is maintained. 

By a majority of nearly two to one the Congress voted 
down the motion of the minority on the proposed general 
strike. Scheidemann declared that this resolution excluded 
the Executives of the Party and Labor Unions as factors 
in proclaiming or refusing to proclaim a general strike, 
and it is true that it demanded that the struggle should be 
viewed as centering mainly in the action of the masses 
instead of the political and labor union organizations. As 
opposed to this policy Scheidemann demanded, as "a con- 
dition precedent to the general strike, the complete unity 
of all organizations of the labor movement." Thus a sin- 
gle powerful union, representing some relatively privileged 
group of workers, could veto the whole democratic move- 
ment. Imagine entrusting democracy, radical reform, or 
even progressivism in this country to the Brotherhood of 
Locomotive Engineers ! As Karl Liebknecht pointed out, 
such a complete unity of the German workers as that re- 
quired by Scheidemann will probably never take place. 

Already Bauer, the leader of the labor unionists in the 
Congress, gave notice that he did not consider equal Prus- 
sian suffrage worth the sacrifices that a general strike would 



GERMAN SOCIAL-DEMOCRACY AS A PROGRESSIVE PARTY 365 

entail — at least at present, or for as long a time as he could 
see ahead. Even the agitation for such a strike he de- 
plored, as leading to possible reprisals against the workers. 
But, unfortunately for him, he tried to show that the Bel- 
gian strike had cost more than it was worth. He was able 
to prove that labor union leaders in Belgium, as elsewhere, 
still attack this strike. But Belgian Socialists present at the 
Congress — in contradiction to Bauer's statements — claimed 
(1) that the Belgian unions as a whole had not lost in 
membership because of the strike (though no doubt some 
of the most conservative and skilled unions had lost men 
and money and it is in these chiefly that the German labor 
leaders, like Bauer, are interested), (2) that the unions 
were not financially crippled, and (3) that the unionists 
were not being exceptionally discriminated against since 
the strike. 

In spite of the temporary retrogression of the Socialist 
Party, the radical democratic movement in Germany will, 
doubtless, continue its advance, first through the minority 
within the Party and among the masses outside of it, and 
later through the Party as a whole. That this is the prob- 
able development is indicated by the fact that the Socialist 
leaders have never suffered from such vigorous Socialist 
attacks as at present, while "pure and simple parliamentar- 
ism," political machine methods, and the Party bureaucracy 
have never been so vigorously criticized in the Party 
press. And this criticism will be listened to. For, since the 
adoption of the new policy, Party membership has practi- 
cally ceased to grow and the Party press is suffering nu- 
merous set-backs. If, under such conditions, the Party does 
not resume its former aggressive fight against militarism 
and for democracy, it will lose that boundless enthusiasm 
and readiness for sacrifice that have been by far its greatest 
political assets. Either it will again lead the fight for de- 
mocracy and social reform, as I have suggested, or it will 
cease to lead the progressive movement and will be forced 
to share its present popularity, in large measure, with the 
newly reorganized Progressive Party. 



366 APPENDIX 

D— FRENCH SYNDICALISM 
A MOVEMENT OF THE ARISTOCRACY OF LABOR 

Up to the present the evolution of the labor movement 
has been a series of disappointments to the wage-earners. 
In Great Britain — after half a century of labor union or- 
ganization and of strikes — the workers began, about 
twenty years ago, to lose faith in the strike and to turn to 
political action. After two decades of political action the 
workers have now become disappointed again and are ap- 
parently beginning to prefer the strike to the ballot. 

In France the evolution has been the other way. The 
democratic constitution of 1876, and the earlier traditions 
of political democracy, became a reality for the working 
people about 1890 — when the reactionary legislation against 
them, which had followed the Commune of 1871, had 
about worked itself out. The Socialists of the various fac- 
tions began to have enormous electoral successes and the 
majority of wage earners began to put their faith in politi- 
cal action — though a large minority still maintained the 
revolutionary traditions of the past. 

Indeed the Socialists were only too successful. Socialism 
became the ladder by which every political adventurer could 
climb to power. Millerand, the anti-militarist, became min- 
ister and anti-militarist Briand, advocate of the general 
strike, became prime-minister and arch-enemy of the strike. 
Augagneur and Viviani became nothing less than conserva- 
tive as ministers. Gerauld Richard became the right hand 
of Clemenceau, Brousse, as Mayor of Paris, welcomed the 
slayer of Ferrer to the capital, etc., etc. Jaures defended 
and befriended every one of these deserters and betrayers 
up to the very last minute, when their position in the Party 
became untenable. Indeed it is among these men that 
Jaures found his closest associates. And every desertion 
and betrayal was preceded by the most revolutionary 
speeches, the most alluring promises of immediate reforms 
and benefits for the working class. 



FRENCH SYNDICALISM 367 

The French working men then began to transfer their 
faith to labor union action. The labor unions adopted 
Socialism as their goal, but proposed to reach it without the 
aid of politics. This idea has now predominated for about 
a decade without gaining any more satisfactory results than 
political action. The failure of the Post and Telegraph 
Strike of 1909 and of the Railroad Strike in 1910 marked 
the climax of the movement. It was evident that a general 
strike of an economic character, that is, a strike supported 
by working men alone, is not practicable as a means of co- 
ercing the government — at least for the present, if not for- 
ever. It became clear also, soon after the strike, that if 
the railroad workers and other government employees — 
absolutely essential to a successful general strike — could 
obtain what they wanted from the government they would 
always be ready to desert the rest of the labor movement. 

To understand French Syndicalism, it is necessary, then, 
to know something of France and something of her "syn- 
dicats" (labor unions). Economically, France is, in some 
respects, a backward nation. While a certain measure of 
progress is assured her through her exceptionally powerful 
middle classes — small farmers, small capitalists, professional 
men, and government employees — this same fact impedes 
all radical progress. For the working class is exceptionally 
small, and is composed largely of skilled workers and gov- 
ernment employees. Thus all effective radical action by the 
French working people is under a double check. The 
workers are in a minority, which is probably destined to 
grow constantly smaller, and a large part of them are more 
closely allied by their nature to the middle than to the work- 
ing classes. 

There is, then, no possibility that the French workers 
can move as fast as those of the United States or Germany 
or England (in spite of their Imperialism), or even those of 
Belgium. Because of France's large middle class, the arti- 
zans who expect to have a business of their own are excep- 
tionally numerous. Because of the vogue of Paris and 
parts of France as pleasure resorts, servants and clerks who 



368 APPENDIX 

expect to become shopkeepers are exceptionally numerous. 
Because of the importance of the manufacture of luxuries, 
skilled and comparatively well paid workers are exception- 
ally numerous. And, finally, government employees, being 
organized, and receiving, in many cases, a more and more 
reasonable treatment, are an increasingly conservative force 
among the unions. 

These forces are all to be reckoned with in addition to 
the conservative internal forces that effectively hold the 
unions in check in France as in other countries. For, in 
France also, there is a conflict between trade and industrial 
unions. But, strange to say, it is the trade federations that 
use the revolutionary and syndicalist phrases and regard 
themselves as revolutionary — though in actual practice they 
are the more conservative. There is little conscious conflict 
between the skilled and the unskilled. For the latter are 
not separately organized on a national basis in any im- 
portant case except that of the Gas-Workers, who, as we 
should expect, are opposed to the so-called revolutionists. 

This situation can only be explained historically. Among 
the most revolutionary French unions are those of crafts- 
men or artizans — for example, bakers or hairdressers, who 
can still hope to set up in business for themselves. Increas- 
ing competition has for generations kept wages exception- 
ally low in such occupations and has made economic inde- 
pendence increasingly difficult to attain. And, while these 
crafts were numbered by the score, they are now scarcely a 
handful. As there was no immediate future for such trades 
they have produced either desperate revolutionists (An- 
archists) or Utopians with their eyes fixed on the distant 
future where they might at last have an opportunity. 
Closely affiliated with them have been such occupations as 
the building trades, which are only half modernized, and 
also the metal trades, which, in France, contain an ex- 
ceptionally large number of skilled workmen, always 
threatened by new machinery. 

In France, moreover, those groups that dominate the 
unions have the tradition of revolutions in which they have 



FRENCH SYNDICALISM 369 

always been indispensable fighters without reaping much 
of the advantages obtained. They tend, for all these reasons, 
to revolutionary ideals — insurrection, general strike, anti- 
militarism, and violence, and they are opposed to politics. 
But these are only ideals and abstract principles. In pro- 
portion as they become disillusioned as to the present possi- 
bilities of labor union action, these same workers revert 
without difficulty to a conservative position, and fall into 
direct antagonism to the interests of the great mass of un- 
skilled workers. 

The disillusionment of the Syndicalists has come. In a 
nation of small capitalists, confronted by conservative 
unions of railway workers and miners, the general strike 
has been practically abandoned. At first many Syndical- 
ists were so devoted to the general strike that they even 
opposed "partial" strikes because they distracted attention 
from the larger object. Then they favored partial strikes, 
but only in proportion as such strikes progressed towards 
the general strike. And now there is little further discus- 
sion of the general strike. It is discovered that this is mere 
talk and that the smallest amount of immediate or "di- 
rect" action is more revolutionary. Now Pouget and Jou- 
haux say that any strike may be a sign of revolt against 
class rule. And, finally, Pouget and most Syndicalists claim 
that capital may be partially expropriated by such partial 
strikes. 

Thus the circle has been completed and the so-called 
ultra-revolutionary unionists now take the same position as 
to practical action as do the ultra-conservative. Even in 
theory there is now little difference between the ruling fac- 
tions of the French and the German unionists, since the 
latter also profess Socialism as an ultimate ideal. More- 
over, there is an exact parallel between this labor union 
policy and the political policy of Parties which, like the 
German Social Democracy and the British Labor Party, 
are under the control of the aristocracy of labor. 

One of the leading Syndicalists, Lagardelle, himself con- 
fesses that the French unions "swing back and forth be- 



370 APPENDIX 

tween revolutionary disturbances and pure and simple 
unionism." But, while there may have been some vacilla- 
tion, there is now also a steady progress from revolutionary 
disturbances to the pure and simple unionism of skilled 
labor, which — for reasons I have stated — rests content with 
such petty struggles as it is able to inaugurate and such 
petty advances as it is able to secure. For the unions gen- 
erally are perfectly aware that they are not yet advancing 
real wages to any marked degree, in view of the rising cost 
of living. As the Secretary of the Confederation Generate 
de Travail said at Brussels (December, 191 1) : 

"While our reformist comrades wish to form alliances 
between workers and employers for obtaining the ameliora- 
tions demanded, we declare, on the contrary, that this 
method can bring no effective result. For if the advantages 
thus obtained are not illusory, reacting against the workers, 
they will be at the expense of the consumers, of which the 
workers are the great ma jerky.'' 

But this same Jouhaux, in the same speech, also made 
the following unsubstantiated and contradictory claim : 

"In general, thanks to the energy spent in the struggles 
and to the mounting force of the syndicalist movement, 
there has been a notable diminution of the length of the 
workday and an increase in wages." 

This last statement, however, is chiefly important not as 
a statement of fact, but as an expression of the Syndical- 
ist's present hopes, which are thus seen to be the same as 
those of the leaders of the aristocracy of labor. 

The French Syndicalists prefer economic to political ac- 
tion. The constitution of the Confederation de Travail says 
that "aside from every political school, it organizes all 
workers who are conscious of the struggle to be carried on 
for the abolition of the wage system and of the employing 
class." And the Congress at Havre (1912) renewed the 
declaration that any member was "perfectly free, outside the 
union, to participate in any form of struggle corresponding 
to his philosophical or political conceptions" and that the. 



FRENCH SYNDICALISM 371 

Confederation had nothing to do with "parties or sects," 
thus making political Socialism a matter of private opinion. 
But this is also the policy of the British and American 
unions — and, indeed, of all unions, except those of Aus- 
tria and Belgium. It has been taken as ultra-revolutionary. 
It may equally well be ultra-conservative. 

Just as the disparagement of political action may repre- 
sent the interests of the aristocracy of labor, so may the 
undue elevation of labor union action, as we see in the fol- 
lowing expressions from Jouhaux's speech (already quoted 
from) : 

"Some claim that the strike is 'the weapon of the 
weak:' that is a mistake, for, besides being the appren- 
ticeship of action, there is hardly a case of capitalists tak- 
ing kindly to being despoiled of part of their incomes or 
of their authority. From each strike the employing class 
emerges weakened; some of its power is gone, while at 
the same time the boldness of labor increases." 

Thus present-day strikes as a whole are presented as 
parts of the class struggle, just as is done by those Socialists 
who represent the aristocracy of labor. This is a very dif- 
ferent thing from saying that strikes may some day become 
parts of a class struggle, provided the time is ripe, and pro- 
vided the working class is held together, in the only way 
this can ever be accomplished, either by the exclusion of the 
aristocracy of labor or by the unquestioned domination of 
the laboring masses. 

Dogmatic Syndicalists, like dogmatic Socialists, have 
paved the way to the compromise of their own position 
by the Laborite or State Socialist faction in the unions 
and the Party respectively, through their denial that the 
capitalist enemy would grant reforms of benefit to labor ex- 
cept through coercion. The reforms, however, are acknowl- 
edged to be of pressing importance, so that the State Social- 
ists can step in, work for these reforms, and claim credit for 
them, in every case where the dogmatists refuse to recog- 
nize the work of progressive capitalists. 



272 APPENDIX 

For example, Jouhaux, in the speech already quoted, 
says: 

"The members of the syndicat are always conscious that 
reforms, whatever they are, can only be the results of their 
efforts. It is thus that the passing of the laws was se- 
cured on industrial accidents, employment bureaus, and 
weekly rest. And even to-day these laws are not enforced 
except where labor organizations are sufficiently powerful 
and have life enough to enforce their enforcement." 

According to this statement those unions most clearly 
representing the aristocracy of labor can claim a part of 
the credit for all legislative progress that favorably affects 
the laboring masses, while progressive capitalists can claim 
none at all. 

The Syndicalist theorists, like many Socialists, make no 
allowance for an intervening stage of State Socialism be- 
tween us and the Socialist society. Nor do they allow for 
the division of the working class which a Laborite or State 
Socialist government entails. They do not even allow for 
the immediately impending stage of State Capitalism. They 
expect capital to remain the same reactionary force that it 
is to-day or to become worse. If this indeed turns out to 
be the case, then on the one hand the most violent methods 
the Syndicalists advocate may some day become the most 
effective, and, on the other hand, all present progress of 
the working class will have to be secured by the working 
class itself — against the resistance of all other classes. 
Against growing oppression and violence from above there 
will be required more and more violence and rebellion from 
below. 

The Syndicalists are no doubt right as to their judg- 
ment of what the present ruling class would do to prevent 
an industrial democracy and to impede even present-day 
reforms if it remained the ruling class. The source of 
their error is the same as that of the older Socialist theo- 
rists. It is due to an absolutely uncritical belief in the 
unity both of the working class and of the capitalist class. 



STATE SOCIALISM IN THE AMERICAN PARTY 373 

and therefore a blindness to the inevitable intermediate 
stages of progress under a political democracy dominated 
first by small capitalists and later by the aristocracy of 
labor. 



E— STATE SOCIALISM IN THE AMERICAN PARTY 

The position of the American Socialists has a peculiar 
importance to the International Movement, as the United 
States is generally conceded to be, economically, the most 
advanced nation. The ablest, most accurate, and most sys- 
tematic presentation of the American position is that of 
Morris Hillquit, who long represented the Party at the In- 
ternational Socialist Bureau. His articles, published in The 
Metropolitan Magazine in 1912 under the title, "Socialism 
Up-To-Date," and later in book form, as "Socialism 
Summed Up," contain a more connected and consistent 
presentation than the Party platform and so give a better 
idea of the American Party. 

Hillquit's fundamental position is seen in his assertion 
that the movement is directed against "the private operation 
of business" and "the private ownership of industry/' That 
this is the goal of State Socialism cannot be questioned. It 
may also be the present goal of the American Party. But 
the professed goal of Socialism, as every one familiar with 
Socialist literature is aware, has hitherto been to put an 
end to "the operation of business" by a ruling class and 
the ownership of industry by a ruling class, and not merely 
to abolish private ownership and operation. Now the opera- 
tion and ownership of business and industry by a class may 
be carried out, directly, by a class-controlled government, as 
easily as it can be carried out, indirectly, by the present 
system of private ownership and operation, under the 
protection of a class-controlled government — a fact amply 
recognized by such leading Socialists as Liebknecht * and 
Kautsky. 2 

Hillquit's statement of Socialism, though liberal at points, 
abounds also with that partizanship, dogmatism, and Labor- 



374 APPENDIX 

ism that so often reduce Socialism and the Socialist move- 
ment to serviceable tools of the State Socialists. His Labor- 
ism appears in this typical statement : 

"The relations between the classes of producers and the 
employing classes are marked by intense, though not always 
conscious, class antagonism and by overt class struggles." 
This class antagonism and class struggle are what the So- 
cialists desire and expect, but they very rarely exist to-day. 
What exists usually is a conflict of class interests, without 
either class antagonism or class struggle, conscious or un- 
conscious. To give the title of class struggle to the conflicts 
of to-day, in nearly all of which one part of the working 
class advances itself at the expense of another (through 
raising the cost of living), is to take common ground with 
that aristocracy of labor which now controls the labor 
unions and Socialist Parties of the world, is the mainstay 
of the movement towards State Socialism, and will become 
the ruling class when State Socialism is an established fact. 
For the chief claim of this labor aristocracy is that the 
strikes and reform legislation, most of which it directs, are 
part of the class struggle. This is the argument by which 
it so often catches and misleads the laboring masses, the de- 
fense by which it habitually protects itself from the attacks 
of radical Socialists. 

The dogmatism of Hillquit appears in the doctrine that 
the material existence of the propertyless wage-earners is 
growing more precarious. This ancient dogma allows a 
Socialist organization to deny that it is to the interest of the 
employer to improve the conditions of the employee, even 
in those ways that increase the employee's productivity 
more than proportionately to their cost, and so add to 
profits. By thus denying the possibilities of labor reform 
by capitalist progressives those Marxists who have preached 
this dogma have made it inevitable that the State Socialists 
would be able to claim the Socialist Party as the proper 
body to perform these greatly needed functions. There is 
every reason, on the contrary, to suppose that precariousness 
of employment will grow less, that a State Capitalist gov- 



STATE SOCIALISM IN THE AMERICAN PARTY 375 

ernment will guarantee security and steadiness of employ- 
ment for the purpose of increasing efficiency. If it should 
not, then this will undoubtedly be one of the first tasks of the 
Socialist Party— postponing other and more important ac- 
tivities. But it will. 

Hillquit says that all other reform movements except 
that centred in the Socialist Party, are as a rule "sporadic," 
"superficial," "indefinite," and "ineffective." Thus he claims 
practically the whole field of reform for the Socialist Party. 
The only previous time in the history of the United States 
that the country could boast of "a political party with a 
social program" at all, Hillquit says, was when the Repub- 
lican Party was first organized for the abolition of slavery. 
And these words were written just before the Convention 
at which the Progressive Party was organized, with its 
clear-cut State Capitalism and with a social program, which 
was certainly radical, since Berger, Ghent and other lead- 
ing Socialists said it was "stolen" in large part from the 
Socialist platform! The similarity is unquestionable, but 
the Socialists had taken their measures, in turn, almost en- 
tirely from non-Socialist sources and these same non- 
Socialist reform movements may also have supplied the 
Progressives with most of the measures in question. 

Like the Socialist platform, which was written before 
the Progressive Convention, Hillquit (in his earlier arti- 
cles, also written before that Convention) even claims the 
anti-trust issue as Socialist property. "The trusts," he 
says, "are the principal cause of the vexatious new prob- 
lem familiarly and intimately known as 'the high cost of 
living/ " The enormous profits a large part of the farmers 
obtained from high food prices, Hillquit, like the Socialist, 
Progressive and Democratic platforms, is careful not to 
mention, for the farmers have several million votes. On 
the contrary, he pictures the farmer as being "dominated, 
controlled and exploited by the power of capitalism just as 
much as the other producing classes." (My italics.) 

Hillquit takes pain to endorse the "class struggle"— 
theoretically. "There is war between and among the 



376 APPENDIX ' : 

classes." This war is "irrepressible," because due to "ever 
present organic economic antagonism." But he also pre- 
sents Socialism as the movement for "public ownership and 
operation of the principal agencies and instruments of pro- 
duction and distribution," which by no means involves a 
class struggle against capitalism. The thing against which 
this movement is directed, as Hillquit says, is "private 
ownership and operation," which, as I have said, is by no 
means the only form of class ownership and operation. This 
"private" control has made of the present system what Hill- 
quit himself characterizes as "a system of general warfare, 
an ugly brutal fight of all against all." (My italics.) And 
the collectivism Hillquit advocates is in reality nothing more 
than a reaction of all society — with the exception of the 
large capitalists — against this disorder. He thus verbally 
endorses the class struggle, but proceeds to describe the 
struggle of collectivism against individualism. His state- 
ment that "no individual or class of individuals can be 
held responsible" for the existing conditions of society is 
indeed as complete a repudiation of the class struggle as 
can anywhere be found. 

We can now understand why this spokesman for so many 
American Socialists claims that the Socialists are the only 
genuine reformers. For all collectivist or State Socialist 
reform is, in their opinion, Socialism, whether accompanied 
by the class struggle or not, as we see in the following 
statement : 

"We are at least ankle-deep in Socialism already, and 
it is not improbable that the future historian will date 
the beginnings of the Socialist regime from, say, the mid- 
dle of the last century, just as we are now placing the 
beginnings of the capitalist era a century or more back of 
the great French Revolution." 

Hillquit then proceeds to trace the beginnings of "Social- 
ism" to Sir Robert Peel and Bismarck! Surely no British 
Fabian, or other frank opponent of the class struggle, has 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 377 

ever progressed any farther away from the position of the 
class-conscious laboring masses than that. 

F— THE AMERICAN SOCIALISTS AND THE RACE 
PROBLEM 

" 'Advanced' Socialist leaders/' says Colonel Roosevelt, 
"are fond of declaring against patriotism, of announcing 
their movement as international, and of claiming to treat 
all men alike; but on this point, as on all others, their 
system would not stand for one moment the test of actual 
experience. If the leaders of the Socialist Party in America 
should to-day endeavor to force their followers to admit 
all negroes and Chinamen to a real equality, their party 
would promptly disband and, rather than to submit to such 
putting into effect of their avowed purposes, would, as a 
literal fact, follow any capitalistic organization as an alter- 
native." * 

The internationalism of the Socialist movement is thus 
squarely challenged by one who voices the views of very 
many people. To what extent do the facts sustain this im- 
pression ? 

It is impossible to minimize the fact that at the American 
Socialist Congress in Chicago (May, 1910) more than a 
third of the delegates favored legislation against Asiatic 
immigration framed along race lines. This anti-Asiatic 
movement had been so strongly endorsed by ex-Congress- 
man Victor Berger and his followers that he even threat- 
ened, on a visit to Berlin, that, in this matter, the American 
party was ready to defy the decisions of the International 
Congresses. It is the "reformists" and those inclined to 
make of the Party a sort of a Labor Party of the British or 
Australian type who led the restrictionists. As the question 
is probably settled as fought out in Chicago, the position of 
the party will remain for some time as it is ; indeed, a re- 
opening of the question would certainly threaten a split in 
the movement. In the meanwhile, Debs, the presidential 
candidate, and others of the best known representatives of 



37$ APPENDIX 

the organization, have taken the strongest possible stand 
against action along racial lines and in favor of maintaining 
the position of the International Socialist Congress of 1907 
at Stuttgart. 

Untermann, who was recently Socialist candidate for 
Governor of Idaho, wrote a few years ago that "the race 
struggle is as much a fact as the class struggle," and con- 
tinued, "The race question will still be with us even after 
we shall have the Socialist Republic, only it will then be 
divested of its class struggle character. But nevertheless 
its settlement will by no means be so easy and amicable as 
some of our Marxian scholars dream. The question as to 
what race shall dominate the globe must be met as surely 
as the question as to what class shall own the world. We 
should neglect our duty to the coming generation of Aryan 
peoples if we did not do everything in our power, even 
to-day, to insure the final race victory of our ozvn people." 
(My italics.) The majority of the committee appointed 
to report this matter to the Chicago Congress, of which 
committee Untermann was chairman, argued much along 
the same lines: 

"Sometimes the party in acting for the immediate in- 
terests of the working class, must come into apparent con- 
flict with its ultimate ideals. This is unavoidable ; we work 
toward our ultimate ideals through and despite these im- 
mediate contradictions. The Socialist Party, in its present 
activities, can not outrun the general development of the 
working class, but must keep step with it. . . . 

"We therefore endorse every demand made and position 
taken by the International Congress on this question, except 
those passages which refer to specific restrictions or to the 
exclusion of definite races or nations. We do not believe 
that such measures are necessarily 'fruitless and reaction- 
ary,' as stated by the International Congress, but on the 
contrary are convinced that any measures which do not 
conform to the immediate interests of the working class of 
the United States are fruitless and reactionary. 

"We advocate the unconditional exclusion of Chinese, 
Japanese, Coreans, and Hindoos, not as races per se, not 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM ^79 

as peoples with definite physiological characteristics, — but 
for the evident reason that these peoples occupy definite 
portions of the earth which are so far behind the general 
modern development of industry, psychologically as well 
as economically that they constitute a drawback, an obstacle 
and menace to the progress of the most aggressive, mili- 
tant and intelligent elements of our working class popu- 
lation." (My italics.) 

The discussion that took place around this question at 
the Congress of 1910 has a double importance. It not 
only reflects accurately the attitude of all the best known 
American Socialists towards the question of international- 
ism among the nations and brotherhood among the peoples, 
but it also helps to answer the question : Is there any such 
thing as International Socialism ? For, even if the position 
of the International Socialist Congress on this particular 
question were not indispensable to all true internationalism, 
the various national organizations would respect and obey 
its decisions if the international organization of the move- 
ment is anything more than an empty shell. 

The majority report of the committee, which had been 
given two years to study the subject, was voted down, but 
the committee was continued. And, after all, its report had 
the support of about forty of the delegates, or somewhat 
more than a third of the congress. Note its statement : 
"We recognize with Marx that the progress of working 
class emancipation does not proceed uniformly and by iden- 
tical methods in all countries, but that the working class 
of each nation will have first to settle with its own ruling 
class before absolute international working class solidarity 
can be realized." The quotations I have given else- 
where from Marx (see Socialism As It Is) indicate 
that this is exactly the opposite of his conclusion, which 
was that a working class victory can not be realized in 
one country until the other leading countries are also ready 
for it. 

The committee report favoring exclusion was brought 
before the convention by Untermann. He said : 



o 



80 APPENDIX 



"As far as Asia is concerned, Asia has immense oppor- 
tunities for developing an outlet. They need not come over 
here. Japan has Manchuria and Korea. China has vast 
districts which it can conquer. Let the Chinese capitalists 
develop Chinese society, just as the American capitalists 
have developed American society. Let them find room for 
their unemployed over there and employ them there and 
develop their own society. Let the Socialists of those coun- 
tries organize their cooperative commonwealth themselves 
first, and then, when they have that organization, when 
they have their strong Socialist and labor organizations, 
then let them talk to us about international solidarity. . . . 
The Aryan race will always occupy a certain geographical 
territory, and what the Asiatics will do in the coming years 
does not concern us at present." 

Here Untermann bases his argument, frankly directed 
against international solidarity, as much on racial as on 
economic grounds, and classes himself definitely with those 
who preach the inevitability of race war — as he had already 
done several years before in the letter already referred to. 

Wolff, representing the Jewish Socialists, said that it fol- 
lowed from the position taken by the exclusionists "that 
all those immigrants who injure the standard of living of 
American workers, who make it more difficult to organize' 
the workers in the United States, ought to be excluded." 
Of course the exclusionists denied this, but the remarks of 
Hunter, then of the National Executive Committee of the 
Party, and Germer of the Miners' Union (now of the Na- 
tional Executive Committee of the Party), seem to verify 
the accusation. Hunter spoke of "foreign labor" brought 
here "for the purpose of breaking down the unions, for the 
purpose of making it impossible for the working class to 
fight, for the purpose of bringing into this country many 
non-voters, which also to a certain extent breaks down the 
Socialist revolt." He also referred to the negro situation 
as being equally impossible to solve, accused the negroes 
of being unwilling to organize, and claimed that the union- 
ists had found themselves "utterly unable to organize the 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 38 1 

Tennessee Iron & Coal Company." Germer said that neither 
the miners of West Virginia, who are foreigners, nor those 
of Alabama, who are negroes, were likely to be or- 
ganized. (An unfortunate prediction in view of the re- 
cent successful strikes.) "So appealing to them to come 
into the organization is not going to bring them in." Here 
we see that the identical criticism directed against the 
Asiatics is directed also against negroes and foreigners in 
general. 

Untermann claimed that it was the past environment of 
the race that he criticized and not the race itself. "Why 
should we emphasize the race?" he asked. "Not as a race 
per se, as the report says ; not because the Chinaman has a 
slit eye, and a yellow skin; not because he wears a blouse 
and a queue; but because having lived in an environment 
which is a thousand years or more behind European civili- 
zation (an unfortunate prediction in view of recent prog- 
ress in China), he has certain qualities that make him less 
easily assimilable than even the lowest European immi- 
grant." At another point he asserted not only that Social- 
ism could be attained without disturbing present race in- 
equalities but even that race prejudice need not stand in 
the way. Like Hunter he blamed the negroes largely for 
existing race prejudice. 

"The question is absolutely imminent in the United States 
on the Western slope. Vast masses of that section are al- 
ready occupied by the Chinese and Japanese, and wherever 
they get control they shove out the white man, and when 
they have crowded us out they will reward us for our sen- 
timental attitude by giving us the kick which we deserve. 

"The same with the negroes in the South. Wherever the 
negroes get control they stand aloof from the white men 
and will not work with them. In other words, there is a 
race feeling there that is so strong that the two races do 
not want to work together. They are not willing to work 
together, and while we stand for international solidarity 
and stand for rigid solidarity, we should be false to our 
Socialist agitation if we insisted first on doing away with 
the race prejudice" (My italics.) 



3§2 APPENDIX 

Berger also dwelt on the fundamental differences be- 
tween the whites and the other races. "We are all of the 
same type ; of the same sort of thinking," said Berger, "we 
may fight occasionally, but after all our mode of thinking 
is very much the same. But, comrades, it is entirely differ- 
ent with these other races. They have their own history 
of about fifty thousand years. That cannot be undone in 
a generation or in two generations, or in three genera- 
tions." The hackneyed appeal to ancient history, familiar 
in all reactionary reasoning, whether in reference to races 
or any other question, the talk about the age-long period in 
which the history of the Asiatics has been different from 
ours, was reverted to by nearly all the advocates of exclu- 
sion. The phrase about it taking three or more generations 
to undo this difference of history is even stronger than 
that employed by American administrations in refusing 
self-government to the Philippines since they, as a rule, 
spoke only of a generation as being essential to bring the 
Philippinos to civilization. Berger, more conservative, 
contemplates three generations before "these other races 
reach our level." The same argument that the Asiatics are 
backward by enormous periods, though perhaps not eter- 
nally inferior, was given by another member of the Com- 
mittee, Wanhope of New York. Speaking for the Report 
of his Committee, he said : 

"It was based upon the statement that you will find in 
the majority report, that the people who come from those 
particular religions are so far back in psychological and 
evolutionary development that they are not an assimilable 
quantity in the United States, and that it is not upon their 
race alone that the position for exclusion stands, but upon 
race plus environment, two things that are absolutely in- 
separable. I think that there are few people here who have 
really any conception of the vast psychological differences 
that divide the people of Asia from those of the. Caucasian 
race. The Hindoos, the Chinese, and to a lesser extent I 
admit, the Japanese, are in an evolutionary stage which 
is really thousands of years behind that of the European 
nations. Their conceptions of life, their ideas, coincide with 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 383 

that particular plane of evolution in which they are. It 
may perhaps elucidate the last statement to say this, that 
while the British have been in possession of India for 150 
years, both of those races the master race and the con- 
quered race, do not understand each other." 

Here are a number of very interesting statements. First, 
that even the Japanese are thousands of years behind 
Europe — we are left to infer not that they are where 
Europe was thousands of years ago, but that it will take 
them thousands of years to catch up. Wanhope is British 
by birth and his statements made it clear that he is as well 
satisfied as any defender of the present British government 
in India that the misunderstanding between those two 
peoples is wholly to the discredit of the Indians and not 
at all to that of the British. In saying that race and en- 
vironment are inseparable he abandoned the pretense that 
the proposed exclusion was not along racial lines. 

Untermann and other exclusionists also used the politi- 
cian's argument that because these people have been de- 
prived of a vote by the existing capitalistic government of 
this country they occupy a politically servile position and 
that their presence is therefore a menace to Socialism. 

"And do not forget," said Untermann, "that these men 
are not citizens. They are not admitted to citizenship. 
Quite aside from the psychological difficulties of reaching 
them, there is the other potent fact that they cannot vote 
after we have got them organized. Either you must in- 
sist that the present exclusion laws shall be repealed and 
then you must also insist that these men shall be admitted 
to citizenship with the privilege of voting, or you must 
insist that they be excluded. In order to render them es- 
sential elements of the proletarian revolution we must 
organize them and get them to use their voting franchise. 
Or we must defend ourselves and exclude them. That is 
our duty as Socialists, and no other." 

The same argument of course would result in allotting 
an inferior position to negroes in the Socialist movement, 



384 APPENDIX 

and also to hundreds of thousands of disfranchised foreign- 
ers and white Southerners. It would also suggest to the 
Socialist's enemies that it is only necessary to disfran- 
chise parts of the working class in order to get the So- 
cialist Party to forsake them. Germer said that the Gov- 
ernor of Alabama had used all the power of the State to 
prevent the negro working men from being organized and 
that it was therefore impossible to do anything with them. 
This reminds one of the Irishman's explanation that the 
people were ready to revolt, only the police would not let 
them. 

Stitt Wilson, now National Executive member, and re- 
cently mayor of Berkeley, California, took a similar posi- 
tion. He protested because "organized labor in America 
and the Socialist Party up to date have permitted the capi- 
talist class of the world to determine when and how they 
shall flood your precincts with your brothers from all over 
the world and make them fight this class struggle to the ad- 
vantage of the capitalist class and to the destruction of our 
own class throughout the world." Undoubtedly this is true. 
We are living in a period dominated by capitalism, and 
neither the Socialists nor organized labor have any oppor- 
tunity whatever at this time to decide questions of immi- 
gration and emigration, except as tools of capitalist parties. 
If, on the other hand, the Socialists secured control of the 
government they would then be in a position to allow prac- 
tically unrestricted immigration, or at least 10 recognize no 
race lines in its regulation — without giving the capitalists 
an opportunity either to make use of the immigrants as 
tools against the working classes or to utilize the fact 
of their exclusion as a pretext for war or militarism. 

The question is, What Socialists would do if they had 
control of the national government. Would American So- 
cialists submit to the decisions of the International Con- 
gress? If so, there could be no racial discriminations in 
legislation. The resolution on immigration adopted by the 
International Congress at Stuttgart was in part as fol- 
lows : 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 38$ 

'The congress does not consider exceptional measures of 
any kind, economic or political, the means for removing 
any danger which may arise to the working class from im- 
migration and emigration, since such measures are fruitless 
and reactionary, especially not the restriction of the free- 
dom of emigration and the exclusion of foreign nations 
and races. 

"At the same time the congress declares it to be the duty 
of organized workingmen to protect themselves against the 
lowering of their standard of life, which frequently results 
from the mass importation of unorganized workingmen. 
The congress declares it to be their duty to prevent the im- 
port and export of strike breakers. 

"The congress recognizes the difficulties which in many 
cases confront the workingmen of the countries of a more 
advanced stage of capitalist development through the mass 
immigration of unorganized workingmen accustomed to a 
lower standard of life and coming from countries of preva- 
lently agricultural and domestic civilization, and also the 
dangers which confront them in certain forms of immi- 
gration. 

"But the congress sees no proper solution of these dif- 
ficulties in the exclusion of definite nations or races from 
immigration, a policy which is besides in conflict with the 
principles of proletarian solidarity." (My italics.) 

Of course the only object in the passing of this resolu- 
tion was that it should be obeyed by the parties who partici- 
pated in the congress. And it is understood by the Socialists 
of each nation that they are subject to the decision of the 
international congresses. At Chicago, however, the ex- 
clusionists declared that the "principle of national auton- 
omy prevents the International Congresses of the Socialist 
Party from laying down specific rules for the carrying out 
of the general principles recognized as valid by all Social- 
ists." 

The majority delegates were not ready to deny all real 
power to the international congress and sought other 
grounds of escape. Stitt Wilson declared : "The Socialist 
movement of Europe is not asking immigrants to come here ; 



386 APPENDIX 

the working class of the world are seeking to get in touch 
with each other to prevent this unnatural migration of their 
brothers." It may be doubted whether this is a fact. The 
Socialist movements of Italy, Austria, Hungary and Russia 
are getting immense benefits from the remittances of emi- 
grants and their occasional return. If the Socialists of 
the countries from which these immigrants are coming ap- 
prove of the immigration or at least of the right to immi- 
grate — as the Stuttgart resolution proved — Wilson must 
either change his position or deny the authority of the In- 
ternational Congress. 

Untermann, Berger, Wanhope, and the other advocates 
of exclusion showed that they did not wish to leave the In- 
ternational Congress, but they did wish to deprive it of all 
practical power, as they expressly declared. If there was 
any doubt on this matter it is removed by Mr. Berger's 
definite threat that, "where it was a bread and butter ques- 
tion," he and the American party would pay no attention 
to the decisions of the International organization. 

Now, what were the most urgent motives of the minority? 
It was asserted by many of the most active delegates that 
the only possible purpose of the consideration of the ques- 
tion at that time, when it was not a political issue, must 
have been to cater to the non-Socialist unions of the Ameri- 
can Federation of Labor. Merrick of Pennsylvania re- 
marked : "I say there are two ways of forming a labor 
party in this country. One way is to organize it on the pat- 
tern of the A. F. of L. Another way is to come into this 
Congress and so modify and qualify the Socialist program 
that it will be acceptable to Sam Gompers and John Mitch- 
ell." Killingbeck of New Jersey made almost an identical 
statement : "Let us be honest with ourselves and say that 
we want a political victory, and, in order to get that vic- 
tory, we must have the co-operation of the American Fed- 
eration of Labor, and say to them : 'We are willing to 
have you dictate to the Socialist Party just what we shall 
do, so that we can make other cities and states as famous 
as Milwaukee !' " I have already discussed the relation be- 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 387 

tween the unions, a "Labor Party" and a Socialist Party. 
And it will be evident to the reader that there is nothing 
inherently improbable about the above accusations. If they 
are true they throw a light behind the scenes, and show all 
the other arguments for exclusion were mere afterthoughts. 

At the Indianapolis convention (1912) the Committee on 
Immigration — which had been continued with approxi- 
mately the same membership — again reported and was again 
continued until the next convention. The process may con- 
tinue indefinitely. There can be little doubt that the Party 
is now probably strongly for exclusion, being on much more 
intimate terms with the American Federation of Labor, 
which is almost unanimously for exclusion. And three out 
of five of the members of the present National Executive 
Committee (Berger, Wilson, and Germer) are, as we have 
seen, aggressive exclusionists, while the other two are strong 
partisans of the A. F. of L. But the present ambiguous 
status quo is convenient, since a policy of exclusion might 
mean the exclusion of the Party from International Socialist 
Congresses and its classification with the Australian Labour 
Party. 

The majority of the committee at Indianapolis (Unter- 
mann, Stitt Wilson, Hunter, and Wanhope) reiterated their 
former position. They began with a reference to the Chi- 
cago Congress: 

"In the course of the discussion, Comrade Morris Hillquit 
introduced a substitute for both reports. This substitute 
evaded the question for or against the existing exclusion 
laws, merely demanding that the mass importation of 
contract laborers from all countries should be combated by 
the Socialist Party. 

"After a debate lasting nearly two days, the congress 
adopted Hillquit's substitute by a vote of 55 against 50. 

"This close vote induced the congress to recommit the 
question for further study to a new committee on immi- 
gration with instructions to report to the national conven- 
tion of 1912. 

"In this new committee the same alignment immediately 
took place. After a fruitless effort of the chairman to get 



388 APPENDIX 

unanimous action, the majority decided to act by itself and 
let the minority do the same. 

"Continued study and the developments of the Pacific 
Coast during the last two years convinced the majority of 
this committee more than ever that the existing exclusion 
laws against Asiatic laborers should be enforced and be 
amended in such way that they can be more effectively en- 
forced. 

"Race feeling is not so much a result of social as of bio- 
logical evolution. It does not change essentially with 
changes of economic systems. It is deeper than any class 
feeling and will outlast the capitalist system. It persists 
even after race prejudice has been outgrown. It exists, 
not because the capitalists nurse it for economic reasons, 
but the capitalists rather have an opportunity to nurse it 
for economic reasons because it exists as a product of 
biology. It is bound to play a role in the economics of 
the future society. If it should not assert itself in open 
warfare under a Socialist form of society, it will neverthe- 
less lead to a rivalry of races for expansion over the globe 
as a result of the play of natural and sexual selection. We 
must temper this race feeling by education, but we can 
never hope to extinguish it altogether. Class-consciousness 
must be learned, but race-consciousness is inborn and can- 
not be wholly unlearned. A few individuals may indulge 
in the luxury of ignoring race and posing as utterly raceless 
humanitarians, but whole races never. 

"Where races struggle for the means of life racial ani- 
mosities cannot be avoided. Where working people strug- 
gle for jobs, self-preservation enforces its decrees. Eco- 
nomic and political considerations lead to racial fights and 
to legislation restricting the invasion of the white man's 
domain by other races. 

"The exclusion of the Asiatic from the shores of this 
country will at least give to the American laborer the ad- 
vantage of fighting the Asiatic competition at long range 
and wholly through international commerce, instead of hav- 
ing to struggle with the Asiatic laborer upon American 
soil. 

"International solidarity between the working people of 
Asia, Europe and America will be the outcome of inter- 
national evolution, not of sentimental formulas. So long 



THE AMERICAN SOCIALISTS AND THE RACE PROBLEM 389 

as the minds of the workers of nations and races are sep- 
arated by long distances of industrial evolution, the desired 
solidarity cannot be completely realized, and while it is in 
process of realization, the demands of immediate self- 
preservation are more imperative than dreams of ideal 
solidarity." 

These are certainly illuminating arguments. They 
would be startling enough if they came from mere dem- 
ocrats or Laborites. From "international Socialists" they 
are — still more startling. But we must remember that all 
four of the majority of the committee are practically 
Laborites in all their views. 

The minority of the Committee (Laukki, Spargo, and 
Meyor London) were equally unsatisfied with the Hill- 
quit evasion at Chicago, and proposed, instead, the reaffir- 
mation of the Stuttgart resolution. 

The situation, at the best, casts the most serious reflec- 
tions on the internationalism of the American Socialists, and 
suggests strongly that they may follow along the lines of the 
Australian Labour Party, which has lately created compul- 
sory military training and added materially to the British 
Navy. 

[Note — I have made no references in this Appendix to 
the body of the text, so that a number of statements that 
appear here — if taken by themselves — might seem to be 
insufficiently explained or to be based on insufficient evi- 
dence. I have not made such references for two reasons: 
First, because they would be so numerous as to disfigure the 
text of the Appendix, and, second, because a previous fa- 
miliarity with the main body of the book is presupposed.] 



NOTES 

INTRODUCTION 

i. Karl Kautsky — "Parliamentarismus und Demo- 
kratie," p. 121. 

2, Speech of Lloyd George, October 11, 1913. 

CHAPTER I 

1. Roosevelt's Speech, August 6, 1912. 

2. All quotations from President Wilson, when not 
otherwise stated, are from his "New Freedom." 

3. The Century Magazine, October, 1913. 

CHAPTER II 

1. The Century Magazine, October, 1913. 

2. Sec. of Labor W. B. Wilson's speech at A. F. of L. 
Convention, November 12, 1913. 

3. W. H. Dawson — "Bismarck and State Socialism." 

4. "European Cities at Work," pp. 152, 243. 

5. Ibid., 144. 

6. H. G. Wells— "New Worlds for Old," p. 185. 

7. Edward Bernstein — "La Salle," p. in. 

8. Chiozza-Money— "Things that Matter," p. 66. 

9. Collier's Weekly, August 24, 1913. 

10. Speech at New York City, October 14, 1913. 

11. European Cities at Work, pp. 200, 203. 



391 



39^ NOTES 



CHAPTER III 



1. New York Sun, April 4, 1913. 

2. William C. Redfield — 'The New Industrial Day," 
p. 142. 

3. G. F. Taylor — "The Principles of Scientific Man- 
agement," p. 9. 

4. Lloyd George — "Better Times," p. 93. 

5. William C. Redfield, op. cit., p. 162. 

6. Ibid., pp. 91, 162. 

7. Ibid., pp. 159, 164. 

8. Op. cit., p. 54. 

9. Josephine Goldmark — "Fatigue and Efficiency," p. 
203. 

10. M. B. Hammond — Annals of American Academy 
of Political and Social Science, June, 191 3. 

11. Saturday Evening Post, June 28, 1913. 

12. Redfield, op. cit., pp. 211-213. 

13. Ibid., p. 159^ 

14. New York Times, November 12, 1913. 

15. Fred C. Howe, op. cit., pp. 127-132. 

16. Howe — op. cit., p. 151. 

17. F. H. Streightoff" — "The Standard of Living in 
America." 

18. Saturday Evening Post, June 28, 191 3. 

19. Quoted by A. Fenner Brockway in the Labour 
Leader, November 20, 191 3. 

CHAPTER IV 

1. "Liberalism and the Social Problem," p. 389. 

2. "Things That Matter," pp. 4-6. 

3. Pearson's Magazine, January, 1913. 

4. Winston Churchill, op. cit., pp. 240-243. 

5. Prof. M. B. Hammond in The Annals of the Amer- 
ican Academy, June, 1913. 

6. Presidential Address to the American Association 
for Labor Legislation, December 28, 1913. 



notes 393 

CHAPTER V 

1. Roosevelt's Speech, December 13, 1910. 

2. The Century Magazine, September, 1913. 

3. Vice-President Marshall's Speech, April 16, 1913. 

4. Taylor, op. cit., p. 9. 

5. Hugo Munsterberg — "Psychology and Industrial 
Efficiency," p. 37. 

6. New York Evening Globe, February 4, February 5, 

1913- 

7. "Monarchial Socialism in Germany," p. 57. 

8. The School Review, April, 1909. 

9. "Socialism As It Is," p. 103. 

10. "More Money for the Public Schools" (booklet). 

11. The Sage Foundation — Comparative Study of 
Public School Expenditures in Forty-Eight States. 

12. "The Larger Aspects of Socialism," p. 317. 

CHAPTER VI 

1. Hilaire Belloc— "The Servile State," pp. 16-20, 
105, 189. 

2. New York Times, November 25, 191 1. 

CHAPTER VII 

1. Karl Kautsky — "The Class Struggle," p. 243.^ 

2. "Better Times," pp. 33, 34. 

3. Collier's Weekly, August 3, 1913. 

4. The Annals of the American Academy of Political 
and Social Science, June, 191 3. 

5. The New Statesman, April 12, 1913. 

CHAPTER VIII 

1. Haywood's Speech in New York, May 24, 1913. 

2. "Value, Price and Profit," pp. 112, 113 — ed. Charles 
H. Kerr, Chi. 



394 NOTES 



3. 
4. 

5. 

6. 

7- 

8. 


Op. cit., p. 109. 

Op. cit., p. in. 

Op. cit., p. 76. 

"Socialism As It Is," pp. 146-174. 

New York Call, March 6, 1910. 

The New Statesman, June 7, 1913. 




CHAPTER IX 



1. Henry L. Slobodin, The New York Call, June 11, 

1913. 

2. I. M. Rubinow, New York Call, June 4, 1913. 

3. Kautsky — Parliamentarismus und Demokratie, 191 1 
ed., pp. 132, 133. 

4. J. R. MacDonald — Socialism and Government, Vol. 
II, p. 12. 

5. "Forecasts of the Coming Century," London. 

6. Kautsky — The Class Struggle, p. 187. 

7. The New Review, January 4, 1913. 

8. Kautsky — Die Wandlungender Gold-production — 
Supplement to Die Neue Zeit, 19 12. 

9. Kautsky, The Class Struggle, pp. 24, 25. 

10. Ibid., p. 21. 

11. Ibid., pp. 178, 179. 

12. Ibid., p. 75. 

13. Bebel — "Woman," ed. of 1910, p. 380. 

14. Ibid., p. 341. 

CHAPTER XI 

1. The American Magazine, January, 191 1. 

2. "The Spirit of Democracy." 

3. New York Journal, August 2, 1910. 

4. Manifesto issued by the Labor Party before election 
of 1913. 

5. The Saturday Evening Post, December 13, 1913. 

6. See Bernard Shaw's debate with Harold Cox, M. P. 



notes 395 



CHAPTER XII 

1. Bulletin of International Labour Secretariat, Vol. 
i, No. 12. 

2. Ibid., Vol. i, No. 12. 

3. Ibid., 191 3, No. 8. 

4. /fcid., 191 3, No. 9. 

5. The New Statesman, London, May 17, 1913. 

6. Z&w/., London, June 7, 191 3. 

7. Hammond — op. cit. 

8. Chicago City Club Bulletin, October 12, 1913. 

CHAPTER XIII 

1. The New Statesman, May 3, 1913. 

2. Solidarity, November 23, 191 2. 

3. Ibid., June 14, 19 13 — article signed J. E. 

4. "Applied Socialism." 

5. Kautsky, op. cit., p. 169. 

6. Op. cit., pp. 166-167. 

7. Op. cit., pp. 168, 169, 170. 

8. Franz Mehring — Geschichte der Deutschen Sozial- 
Demokratie, Vol. IV, p. 154. 

9. The New Statesman, May 31, 191 3. 

CHAPTER XIV 

1. Heinrich Schulz — Der Schulreform der Sozialdemo- 
kratie, pp. 90, 91. 

2. Otto Riihle — Grundfragen der Erziehung, pp. 
63, 64. 

3. Schulz — op. cit., p. 90. 

CHAPTER XV 

1. For resolutions of this and other Congresses men- 
tioned, see Sombart's "Socialism and the Socialist Move- 
ment," pp. 199-200. 

2. Edward Bernstein, "Evolutionary Socialism," p. 160. 



396 NOTES 

3. Keir Hardie, "India," p. 126. 

4. Ibid., p. 104. 

5. 'The Socialist Review," April, 1909. 

6. J. R. MacDonald, "Labour and the Empire," p. 63. 

7. Ibid., "Socialism and Government," Vol. ii, p. 94. 

8. Ibid., Vol. ii., p. 80. 

9. Ibid., "Labour and the Empire," p. 36. 

10. The New Statesman, August 30, 1913. 

11. Ibid., July 20, 191 3. 

12. Ibid,. August 2, 19 1 3. 

13. See Syllabus for the address at Queens Hall, April 
18, 1910. 

14. "Justice," London, March 20, 1909. 

15. Kautsky, op. cit., p. 102. 

CHAPTER XVI 

1. The New Statesman, June 7, 1913. 

2. Taylor, op. cit., p. 21. 

3. Vienna Neue Freie Presse, May 11, 1913. 

4. Mehring, op. cit., Vol. iv, p. 52. 



CHAPTER XVII 

1. Emerson's Essay on Education. 

2. Riihle, op. cit., p. 66. 

3. Roosevelt's Santiago Speech, November 22, 1913. 



APPENDIX B 

1. Bebel's "Life," p. 114. 

2. Bebel's "Aus Meinen Leben," p. 319. 

3. Edward Bernstein, "Ferdinand La Salle," p. 172. 

4. Ibid., pp. 104, 105, 122, 125. 

5. Liebknecht, "No Compromise," Chas. H. Kerr ed., 



p. 26. 



notes 397 

6. Ibid., pp. 21, 44. 

7. /Wd., p. 37. 

8. Liebknecht, "Socialism, What It Is and What It 
Seeks to Accomplish," C. H. Kerr, p. 61. 

9. Bebel's "Woman," Stern's translation, p. 406. 

10. Bebel's "Life," p. 301. 

11. Mehring, op. cit., Vol. IV, p. 335. 

12. Ibid., p. 37. 

APPENDIX C 

1. Die Neue Zeit, September 12, 191 3. 

2. The New York Call, October 4, 191 3. 



APPENDIX E 

1. Liebknecht, "Socialism, What It Is," etc. 

2. Kautsky, "The Class- Struggle." 



SUBJECT INDEX 



Agriculture, 83-85, 142, 267-269 
(see also Land Reform and 
Cost of Living). 

Altruism, 67-70 (see also Prac- 
tical Ideals). 

America, United States of. 
(The references to parties 
or movements refer to 
America when not other- 
wise stated. The refer- 
ences to subjects are not di- 
vided as to the countries — 
all subjects considered being 
international in character.) 

American Federation of Labor, 
161, 2ii, 227, 228, 230, 386. 

Arbitration, Compulsory, see 
Strikes. 

Asiatics, see Race Problem. 

Australia : 

Progressivism in, 1, 3, 27, 63, 

127, 129, 144, 189, 275 ; 
Laborism in, 94, 160, 200, 201, 
210-213, 215-218, 223, 277, 

295, 387, 389; 
Socialism in, 210, 211. 
Austria, 282, 288, 386. 



B 



Bakeries, see Government Own- 
ership. 

Banks, see Government Owner- 
ship. 

Belgium, 277, 282, 289. 



Canals, see Government Owner- 
ship. 

Capitalism, State, see Progres- 
sivism. 



Capitalists, Large, see Plu- 
tocracy. 

Capitalists, Small, see Progres- 
sivism. 

China, 276, 280, 287, 295, 380-383. 

Class-Struggle : 
Between Large and Small 
Capitalists, see Plutocracy ; 
Between Small Capitalists and 
Non-Capitalists, 131- 149, 
150-162, 163-183, 183-192, 
193-206; 
Between the Aristocracy of 
Labor and the Laboring 
Masses, 207-219, 297-310, 
311-322. 

Collectivism, see Progressivism 
and Laborism. 

Communism, 191. 

Competition, Restoration of, 10- 
18. 

Compulsory Arbitration, see 
Strikes and Minimum Wage. 

Conservation of Human Re- 
sources, see Labor Legisla- 
tion. 

Corporations, 42. 

Cost of Living, 91, 183, 200, 312, 
313, 342, 343, 358, 362 (see 
also Agricultural). 

Currency, see Labor Legisla- 
tion. 



Democracy, Industrial, 121-123. 
Democracy, Political, 2, 4, 121- 

130, 328-365. 
Democratic Party (of the 

United States), 3, 7, 16, 17. 
Denmark, 219, 289. 
Duties, Customs, see Tariff. 
Duties, Death, see Inheritance 

Tax. 



399 



400 



SUBJECT INDEX 



Education, 106-120, 192, 193, 245, 
246, 260-263, 313-317. 

Efficiency, Industrial or Na- 
tional, see Labor Legisla- 
tion. 

Egypt, 287. 

Employment, see Labor Legisla- 
tion. 

Erfurt Program, 177, 251-259. 



Fabian Society, The, 241-246. 
Farmers, see Agriculture. 
France : 

Progressivism in, 127, 129, 

130, 137; 
Socialism in, 282 ; 
Syndicalism in, 156, 208-210, 

366-373- 

Forecasts, see Science. 

Forests, see Government Own- 
ership. 



Germany : 

Progressivism in, 24-27, 30, 73, 

74, 113, 127; 
Laborism in, 177, 251-263, 282, 

323-328, 328-345, 345-365; 
Socialism in, 233-237, 251-263, 
282, 315-317, 323-32S, 328- 
345, 345-365- 
Great Britain: 

Progressivism in, 1-3, 6, 21, 
23, 25, 29, 50, 51, 74, 75, 78, 
79, 127, 136, 201-204; 
Laborism in, 160-162, 172, 
221, 222, 231, 241-246, 249, 
250, 273, 277, 282-291 ; 
Socialism in, 221, 222, 249, 
250, 273, 277, 282-291. 
Graduated Taxes, see Taxation. 
Gotha Program, 257, 260, 336. 
Government Ownership (and 
Operation), 2, 3, 19, 24, 25, 
28, 38-42, 169, 170, 190, 251- 
259, 265-267, 338, 339- 



H 



Holland, 219, 277, 282, 289. 
Hours of Labor, see Labor 

Legislation. 
Hungary, 386. 



I 



Ice, see Government Owner- 
ship. 

Ideal, The Practical, XXV- 
XXIX. 

Imperialism, see Nationalism. 

Income, Distribution of, 80-95, 
249. 

Income Tax, see Taxation. 

India, 273, 276, 282, 284, 287, 295, 
382. 

Industrial Education, see Edu- 
cation. 

Industrial Workers of the 
World, 211, 227, 228, 231, 
301, 302. 

Inheritance Tax, see Taxation. 

Insurance, Workingmen's, see 
Labor Legislation. 

"Intellectuals," The, 240-246. 

Internationalism, see National- 
ism and Race Question. 

International Socialist Con- 
gresses, 239, 275, 277, 278, 
282, 306, 307. 

International Labor Union Sec- 
retariat, 209, 210. 

Ireland, 127. 

Irrigation, see Government 
Ownership. 

Italy : 
Syndicalism in, 210, 211. 



Japanese, 382, 383. 



Labor, Aristocracy of, see Class- 
Struggles, Laborism and 
Socialism. 



SUBJECT INDEX 



40I 



Labor Legislation, 4, 24, 28, 45- 
79, 100, 191, 251-259. 

Labor Unions, 150-162 (see also 
Laborism, Syndicalism, La- 
bor Legislation, Strikes, and 
Minimum Wage). 

Laboring Masses, see Class- 
Struggles, Socialism and 
Syndicalism. 

Laborism in America, 220-246, 
247-271, 272-296, 297-310, 
323-345, 345-365, 366-373, 
373-377, 378-389. (See also 
Great Britain, Germany, 
France, Australia, and New 
Zealand.) 

Land Reform, 4, 5, 25-28, 42, 43, 
201-204 (see also Tax Re- 
form and Agriculture). 

London (see International So- 
cialist Congresses). 

Lumpenproletariat, 233-235. 



M 



Mannheim Congress, 260, 263, 

315-317. 

Markets, see Government 
Ownership. 

Mexico, 276, 280. 

Militarism, see Nationalism. 

Milk, see Government Owner- 
ship. 

Mines, see Government Owner- 
ship. 

Minimum Wage, 6, 63-66, 92-94, 
210-219, 250, 269-271, 312, 
313. . 

Monopolies, see Plutocracy and 

Government Ownership. 

Mother's Pensions, see Labor 
Legislation. 

Municipalization, see Govern- 
ment Ownership. 



N 



Nationalism, 28-30, 47, 272-296, 
345-365 (see also Race 
Question). 



Nationalization, see Govern- 
ment Ownership. 
Negroes, 125, 126, 287, 380-382. 
New Zealand: 

Progressivism, 197; 

Laborism, 210-213, 217. 



O 



Oil, see Government Owner- 
ship. 

Opportunity, 96-120 (see also 
Education). 



Plutocracy, and the Anti- Plu- 
tocratic Movement, 1, 6-20, 
24-39, 183. 

Political Action, 163, 183, 308- 
310. 

Professional Classes, see The 
"Intellectuals." 

Progress, The Present Law of, 
XXIX, XXXV. 

Progressive Movement, Rela- 
tion to State Socialism and 
Socialism, XV-XIX; 
and Collective Reform, 1-45; 
and Labor Reform, 46-78; 
and Education, 106, 120; 
(See also Great Britain, Ger- 
many, France, Australia and 
New Zealand.) 

Progressive Party (of the 
United States), 3, 5, 7, 16, 
18-66, 67, 100. 



Race Question, The, 377-389. 

Railways, see Government 
Ownership. 

Reclamation, see Government 
Ownership. 

Republican Party (of the United 
States), 3, 7, 16, 17. 

Roads, see Government Owner- 
ship. 

Russia, 276, 284, 288, 386. 



402 



SUBJECT INDEX 



"Sabotage," 301-305. 

Salaried Classes, see The "In- 
tellectuals." 

Schools, see Education. 

Science and Social Forecasts, 
XIX-XXV. 

Secretariat, see International 
Labor Union. 

Servants, 233, 234. 

Single Tax, see Land Tax. 

Skilled Labor, see Laborism, 
Socialism and Class-Strug- 
gles. 

Slaughter-Houses, see Govern- 
ment Ownership. 

Social Forecasts and Science, 
XIX-XXV. 

Socialism, 297-310, 311-322, 323- 
328. 

Socialist Movement, The, 6, 42, 
151, 152, 156-162, 163-183, 
220-246, 247-271, 272-296, 
323-328, 345-36"5, 373-377, 
377-3?9 (see also Great 
Britain, France, Germany, 
Italy, Belgium, Australia 
and New Zealand). 

South, The, 125, 126. 

State Capitalism, see Progres- 
sivism. 

State Socialism, see Laborism. 

Steamships, see Government 
Ownership. 

Strikes, 129, 130, 250, 305-307, 
363-365, 366-373. 



Stuttgart (see International So- 
cialist Congresses). 

Switzerland, 289. 

Syndicalism, 151, 156, 193, 208- 
211, 213, 231, 366-373 (see 
also Great Britain, France 
and Italy). 



Tariff, Customs, 91, 92 (see 
Cost of Living). 

Tax Reform, 4, 5, 19, 24, 25, 42- 
44, 249-250 (see also Land 
Reform and Cost of Liv- 
ing). 

Trusts, see Government Owner- 
ship. 



U 



Unemployment, see Labor Leg- 
islation. 

Unskilled Labor, see Class- 
Struggles, Socialism and 
Syndicalism. 



W 

Wages, 87, 88, 144, 192 (see also 

Minimum Wage). 
Water Power, see Government 

Ownership. 
Woman Suffrage, 4. 



NAME INDEX 



Abbot, Lyman, 199. 
Addams, Jane, 77. 
Asquith, 202-204. 
Augagneur, 366. 

B 

Baker, Ray Stannard, 231. 

Bauer, 364, 368. 

Bebel, August, XXXIV, 177, 182, 

183, 307, 3io, 329, 334, 335, 

338, 344, 350, 357, 364. 
Belloc, Hilaire, 126-128. 
Benda, 261. 
Berger, Victor, 171, 377, 382, 

386. 
Bernstein, Edward, 30, 133, 279, 

281, 282, 294, 334. 
Beveridge, Senator, XVI, XVII, 

66, 67, 76, 100, 1 01. 
Bismarck, Prince, 23, 27, 30, 256, 

328-331, 377- 
Brandeis, 9, 15. 
Brentano, 357, 364. 
Briand, 366. 
Brooks, John Graham. 
Brooklyn Socialists, 311. 
Brousse, 366. 
Brown, H. L., 63, 93. 
Bryan, W. J., 9. 
Bryce, James, XXII, XXIII, 

XXIV. 



Carlton, 119. 

Cauer, 260, 261. 

Century Magazine, The, 231. 



Chapin, R. C, 65. 

Chiozza-Money, 39. 

Churchill, Winston, 2, 21, 23, 25, 

29, 33, 34, 50, 68, 75, 76, 86, 

92, 203, 249. 
Collier's Weekly, 40, 137. 
Comte, XIX. 
Crane, Frank, 107, 108. 



Darwin, 138. 
David, 282, 355. 

Debs, Eugene V., 91, 128, 174, 
230, 377- 



Eliot, Charles W., XXIV, 113- 

117. 
Emerson, 31, 32, 314. 
Engels, Friedrich, 30, 31, 132, 

307, 333, 334, 335. 



Farrell, James A., 
Fichte, 317. 
Fischer, 355. 
Fisher, Irving, 70. 



George, Lloyd, XXX, XXXI, 2, 

32, 51, 60, 68, 77, 78, 201, 
203, 204, 219, 231, 249. 

Gerault-Richard, 366. 

Germer, Adolph, 380, 384. 

Geyer, 354. 



403 



4<M 



NAME INDEX 



Giffen, Sir Robert, 97. 
Gompers, Samuel, 386. 
Gore, Senator, 124. 
Grey, Sir Edward, 290, 291. 

H 

Hardie, Kier, 219, 282-284, 290. 
Haywood, W. D., 156, 211, 231. 
Higgins, Justice, 64-66, 216, 217. 
Hilferding, 359. 
Hillquit, Morris, VIII, 165-171, 

346, 373-377, 387. 
Howe, F. C, 26-29, 30, 42, 43, 

73, 74, 136. 
Hunter, Robert, 380, 381, 387. 
Hyndman, H. M., 288, 289. 



Jaures, 165, 366. 

Jefferson, XVI, 81, 136, 314. 

Jouhaux, 369-372. 

Journal, The, New York, 199. 



Kautsky, Karl: 
On Labor Unions, 160, 161 ; 
On Political Action, 165, 170, 

171, 176-182, 307; 
Against the Laboring Masses, 

229, 230, 233-237, 240 ; 
On the State Socialist Pro- 
gram, 264; 
For Economic Nationalism, 

292; 
Progress Only Through Ma- 
jorities, 327; 
Says There Are No Distinc- 
tively Socialist Measures, 
346, 350. 
Kennedy, John C, XI. 
Koch, 261. 
Killingbeck, 386. 



La Follette, 36, 57. 
Lagardelle, 369. 



La Salle, 334, 335- 

Laukki, 389. 

Le Rossignol, 197. 

Levine, Louis, 301. 

Liebknecht, Karl, 364. 

Liebknecht, Wilhelm, XXXIII, 

XXXIV, 163, 307, 310, 327, 

335-337, 34i. 
Lincoln, 81, 103, 136, 314. 
London, Meyer, 389. 



M 



Macdonald, J. R., 161, 172, 219, 

284-287, 291. 
Marshall, Vice-President, 43, 

104. 
Marx, Karl: 
Erroneous, Forecasts, XXXII, 

XXXIII; 
On Labor Unions, 156-160; 
On State Socialism, 257, 258; 
Vs. Nationalism, 278, 379; 
On Political Action, 306, 307; 
On Education, 315; 
For Solidarity of Labor, 224, 

323-328 ; 
On La Salle, 334, 335; 
For Revolution, 364. 
Mehring, Franz, 307, 339. 
Merrick, Fred, 386. 
Metropolitan Magazine, The, 

XXVIII, 173. 
Millerand, 366. 
Mitchell, John, 386. 
Morley, John, XXVIII, 348. 



N 



Nearing, Scott, 65, 144. 
New Statesman, The, 241, 242. 
Newton, 138. 
Norris, Senator, 43. 



Ostwald, XIX, XX. 
Owen, Senator, 40, 41. 



NAME INDEX 



405 



Pearson's Magazine, 91. 
Pestalozzi, 317. 
Pouget, 156, 369. 



Q 



Quelch, 289. 



Redfield, William C, 55, 5<5, 61, 
68, 69, 74, 76. 

Roberts, Elmer, 113. 

Roosevelt, Theodore : 
On Altruism, XXVIII; 
and Partial Collectivism, 
5-10, 13-15, 18, 19, 21-23, 25, 

33, 34; 
Against Plutocracy, 47, 49, 54, 

68, 72, 76, 771 
On Equal Opportunity, 99, 

100; 
and Democracy, 124, 125, 129; 
and the Class-Struggle, 136, 

137, 321 ; 
and Labor Unions, 150; 
and Collectivism, 171 ; 
Doubts Socialist Interna- 
tionalism, 377. 
Rousseau, 138, 317. 
Rubinow, I. M., 165. 
Riihle, Otto, 317. 



Saturday Evening Post, The, 8* 

201. 
Schrader, G. H. T., 112. 
Schulz, Heinrich, 261, 262, 358. 
Seager, H. R., 92, 93. 
Shaw, Bernard, 149, 175, 205. 
Simons, A. M., 173. 
Singer, 357. 

Slobodin, Henry L., 164. 
Solidarity, 227, 229. 
Sonnemann, 329. 
Spargo, John, 232, 389. 



Spencer, Herbert, XXVIII, 126. 

Stadthagen, 356. 

Stewart, 197. 

Stone, Warren E., 155. 

Streightoff, F. H., 84. 

Sudekum, 356. 

Sun, The New York, 51. 



Taft, William Howard, 96, 

99- 
Taylor, G. F., 56-59, 61. 
Times, The New York, 93. 
Tolstoi, 114. 
Trautmann, W. E., 301. 
Tregear, 212, 217. 



U 



Untermann, Ernest, 378-381, 383, 
386, 387. 



Vandervelde, 282. 
Viviani, 366. 
Vollmar, 252, 339. 
Von Kol, 282. 

Vorwaerts (Berlin), 314, 315, 
357- 



W 

Wagner, Adolf, 24, 25, 204. 
Walling, W. K, 106, 114-116, 

1 16- 1 19. 
Wanhope, Joshua, 382, 383, 386, 

387. 
Ward, Lester F., 245. 
Webb, G. H., 62, 63. 
Webb, Sidney, Mr. and Mrs., 

148, 149, 161, 162, 226, 227, 

241-246, 286-287, 302, 303. 
Wells, H. G., XXVII, 28, 241. 
Wendell, Herman, 345, 356, 357, 

358, 360. 



406 



NAME INDEX 



White, William Allen, 198, 309. 
Wilson, Woodrow: 

and Partial Collectivism, 5-17, 

19, 21, 22, 26; 
Against Plutocracy, 47, 49, 51- 

55, 68; 
and the Cost of Living, 91 ; 
On Equal Opportunity, 99, 
101-105; 



and Democracy, 124; 

and the Class-Struggle, 
138-142; 

and Labor Unions, 150. 
Wilson, W. B., 22. 
Wilson, Stitt, 384-387. 
Works, Senator, 94. 
World's W T ork, The, 231. 
Wurm, 353-356. 



136, 






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4 




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